IHS Markit has launched a new service designed to help investment firms comply with MiFID II’s RTS 28, which requires them to publicly report their top five trading venues by asset class.
Compliance with RTS 28 can be a burden because investment firms must create up to four documents for each of the 22 asset classes covered by the regulation, including equities and multiple types of debt instruments, OTC derivatives, structured products and emissions credits. Within each asset class, trades must be tabulated by customer type and order type and those reports published on a public web site.
“It’s easy to underestimate the effort required to comply with RTS 28,” said Michael Aldridge, managing director of Trading Services at IHS Markit. “Smaller firms with uncomplicated trading activity might find compliance straightforward, but as a firm’s activity increases in complexity, so does its reporting obligation.”
The cloud-based solution from IHS Markit enables investment firms to outsource the key data classification processes required for compliance. Using a propriety calculation engine designed for RTS 28, the service will categorize trades, tabulate data according to the statute and host required reports on a public website. The solution also offers detailed analytics on demand and through regular scheduled reports.
“As with so many financial industry regulations, the risk with RTS 28 is that compliance teams focus on the mechanics of compliance rather than adding value to the enterprise by truly monitoring and analyzing execution quality,” Aldridge said. “We’ve created the calculation engine and programmed the business logic into our system, so that investment firms don’t have to spend time or resources aggregating and classifying trade data.”