Walking through MiFID

Deutsche Börse OTC Post-trade Transparency Service

By None

Deutsche Börse

OTC Post-trade Transparency Service

From 1

November, investment firms will have to publish volume and time of all shares

admitted to trading within the European Economic Area if the trade is executed

outside a regulated market or a multilateral trading facility (MTF). The data

is to be checked and each transaction is to be published separately and only

once. Publication is generally required within three minutes after execution.

With its OTC Post-trade Transparency Service, Deutsche Börse is ready to offer

its customers a fully compliant MiFID tool, with such extras as block trade delay,

reporting on behalf of third parties, marketing functionality, clearing and

settlement and individual end-of day compliance reporting.

Publication via CEF® data feed

This service features reporting of OTC

trades via the Xetra® Values interface and the Xetra® GUI in combination with

real-time publication via the CEF® data feed. As a general rule, this

guarantees market publication within milliseconds of transaction entry. The

large number of information providers connected to CEF® ensures widespread

publication of the relevant data.

Assuring data quality

The Deutsche Börse OTC Post-trade

Transparency Service includes data quality assurance. Price and volume are

checked for plausibility. If a questionable set of data is detected, it will be

marked accordingly and sent to the customer for verification while it will be

published at the same time to adhere to MiFID regulation. Any flagged trade

data will subsequently either be confirmed or corrected by the reporting party.

Furthermore, all trade reports transmitted to Deutsche Börse are compared to

the current list of instruments covered by MiFID. Instruments which are not relevant

will not be published, reducing the need to identify instruments subject to

MiFID at the customer-side.

Entrance on behalf of third parties

Xetra® members can choose to enter trades

on behalf of third parties for investment firms without a Xetra® membership.

This feature meets the demands of a number of Xetra® members.

End-of-day reporting

Deutsche Börse produces end-of-day

compliance reports for each reporting client on a daily basis. Investment firms

can use these reports to prove MiFID compliance to regulatory authorities.

Deutsche Börse also provides performance reports as required under the

regulation of the FSA in the UK.

MiFID OTC Post-trade Transparency Service

Block trade delay

MiFID allows a delay in publishing large

transactions which have been executed for a client against the investment firms’

own book. A study conducted in 2006 by Frankfurt-based E-finance Lab, a

financial market research institute, showed that 37.8 percent of the polled

investment firms were interested in such block trade delay functionality but

many decide against it because of the high costs involved. By offering a fully

automated block trade delay service to a large user base, Deutsche Börse is

able to achieve economies of scale, making the

service cost efficient on a per user basis.

Flexible use of trading venue

identification

Generally, investment firms can decide on

a trade by trade basis whether to publish a transaction under their own name or

to use the acronyms ‘OTC’ or ‘SI’ as execution venue-ID. As Deutsche Börse

delivers market data to almost 400 data vendors via CEF®, this function can be

utilised as an efficient marketing tool.

The MiFID service is based on Xetra® OTC

functionality which supports OTC clearing and settlement for a sub-group of instruments. That

is why a combination of OTC trade reporting, clearing and settlement is

possible. Clients using the service will only have to submit the relevant data

once, eliminating redundant data entry into different systems on their own

sites.

Deutsche Börse already disseminates almost the complete

view of the German equity market via its real-time data feed CEF®. Adding OTC

equity data on CEF® further supports easy consolidation for all data vendors.

Each vendor connected to CEF® has access to data simultaneously. OTC data

dissemination via CEF® is made available via the identical administrative and technical

infrastructure as all other Deutsche Börse market data sets.

The Deutsche Börse OTC Post-trade Transparency Service

is a convenient path towards MiFID, requiring minimal customer effort and

expense.

Deutsche Börse

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