MiFID, the Markets in Financial Instruments Directive is a Directive from the European Commission instructing EU member states to enact primary legislation.

What are its primary objectives?

• To improve “passporting”, i.e. the ability of a financial institution based in one EU member state to conduct business in the other member states without requiring regulatory approval in each state
• To improve transaction transparency, particularly to protect retail purchasers of equities.
• To force “systematic internalisers”, i.e. organisations that complete transactions internally rather than on a market, to publish their off-market pre-trade prices and post-trade transaction details.
• To enforce across the EU a consistent system of “best execution”, meaning that clients of trading bodies can expect (and that those bodies create and maintain an audit trail to
  prove) that they were provided with the best combination of price, service, timeliness and so on.
• To improve competition, including encouraging trading bodies based outside the EU to transact business inside the EU.
  

What do we know?

• MiFID came into force on 1st November 2007.
• The transparency aspects of MiFID initially apply to equity trading; they are likely to be extended to other instruments but not until a later date.
• The best execution aspects of MiFID apply to all financial instruments (specifically including foreign exchange).
• MiFID requires “systematic internalisers” to contribute pre-trade quotes for "liquid shares" to one or more data venues in real-time, and to maintain a record of each quote for a
  minimum of 1 year.
• MiFID requires all financial institutions executing trades in any equity admitted for trading anywhere within the MiFID 30 countries to contribute post-trade data (trade reports) to one or more data venues in as near to real-time as possible, and in any event within three minutes.
• Financial institutions must contribute their data somewhere.
• Contributed data has to be easily consolidated: i.e. contributing data to a simple website, even the bank’s own, will not be acceptable.
• In order to ensure compliance with the best execution provisions of MiFID, trading organisations will need access, both in real-time and historical, to MiFID data from some or all other traders in the same instruments.
• The risk of there being differences in legislative implementation between member states has been substantially reduced by a large proportion of the Level 2 documentation being published as a Regulation rather than a Directive.
• Real-time data contribution is our business! We will provide our clients with the means of connecting their back office systems and market data platforms to the appropriate contribution venue(s).
  

What do we think is likely?

• Because any organisation from outside the EU that trades inside the EU will be required to comply with the provisions of MiFID, it’s likely that MiFID will be widely implemented by
  financial services organisations based in Switzerland.
• Banks (and other contributing organisations) are likely to contribute data to multiple venues. The reasons we think this are:
  • For pre-trade quotes: if they’re contributing to comply with MiFID, they might as
    well use those contributions as at least indicative, and possibly executable, prices.
    This would combine their MiFID compliance with their normal business.
  • For guaranteed compliance and resilience: MiFID places the onus on the bank to
    publish data, not on the data venue. If a single venue becomes unavailable, or
    can’t handle the volume of contributed data, then it’s the bank that will be held
    responsible for the failure to publish the data; so publishing data to more than one
    venue reduces the risk of non-compliance.
    

Gissing’s MiFID position

• Our users already have the world’s best software for contributing data to multiple vendors and destinations.
• Regardless of the Aggregators and protocols used for MiFID, users of Gissing ConteX
• MCS will have access, in a timely fashion, to appropriate MiFID handlers to enable contribution to each of these venues.
• This means that as Gissing ConteX clients make their MiFID data available on their market data platform or other appropriate data source Gissing ConteX will be able to
  contribute both pre-trade and post-trade data to their choice of venues.
  
• We will ensure that Gissing’s ConteX solutions will be, and will continue to be, the best and most reliable mechanism for MiFID contribution.