- The availability of MIFID II data has been one of our hot topics in 2018.
- We’ve aired our frustrations previously.
- Happily, MIFID II data is about to become truly accessible to all.
- Find out how and why below.
Questions and Answers
ESMA have just released an updated “Questions and Answers On MiFID II and MiFIR transparency topics“.
Proponents of transparency, such as ourselves, have been looking for clarification as to how APAs should publish public data.
The good news is that today’s update should be positive for transparency in our markets.
Let’s run through the Questions and Answers document.
Q: How should trading venues, APAs and CTPs make data available free of charge 15 minutes after publication and ensure non-discriminatory access to the information?
This is the big one. The answer is unequivocal:
ESMA expects post-trade data [to be made] available free of charge 15 minutes after publication in an easily accessible manner for all potential users using a format that can be easily read, used and copied.
(Emphasis mine). I’m very glad they included the “and copied” part of that answer. This means that we will actually be able to manipulate the data. In addition, we have further clarification that machine readable data must also be provided by trading venues (as well as APAs):
ESMA expects that trading venues follow similar publication standards and publish data in a machine-readable way.
There follows a whole section on “Imposing restrictions on access to the published post-trade data”. We ran through some of this on our live blogs in January. I stated then that:
MIFID II data could have been delivered via a standardised format from all providers, delivered in a CSV file that was truly “machine readable”. With better regulations in place, this could have happened. Look at the US.
Instead, we have seen a lot of different approaches from different operators.
This Q&A has stopped short of imposing a precise standardised format, but this does not prevent the industry from converging on such a standard. In the long run, common data standards reduce costs through the simplification of everyone’s processes. And they allow for true amalgamation, giving a transparent picture of our markets.
Imposing restrictions on access to the published post-trade data
Due to the varied approaches that the industry has taken in publishing the data, the Q&A is specific about what is disallowed. The document clearly calls out some of the unfair practices we have seen:
The post-trade data should be available to anybody free of charge and in a format which can be understood by the average reader.
Make clear instructions to the public on their website on how and where to access the data.
ESMA considers that publishing information on a website that is not accessible to everybody imposes restrictions on access to the data and does not meet the requirement for making information available free of charge.
Hurrah! No more log-ins to lose! Maybe my time can also be better spent assessing the data, rather than picking up the phone to multiple APAs, MTFs, data vendors asking numerous people “where is your public MIFID II data?”. I will not miss that one bit…..
This next one is particularly specific:
The publication of post-trade data through third parties that do not charge specific fees for the relevant post-trade data but raise regular, for instance monthly or yearly, fees for subscribing to their services, does not meet the requirement to make information available free of charge.
Well done ESMA for calling out this practice! This relates to APAs and trading venues making data available only via data vendors with terminals, such as Bloomberg or Reuters. This seemed particularly brazen when Bloomberg themselves were making nice CSV files publicly available on an easy to find website for both APA and MTF activity.
We are a data vendor ourselves, but we didn’t understand how bundling data into an expensive subscription plan was succeeding in making data “public”.
Furthermore, ESMA is of the view that allowing access to post-trade data only from ex ante registered IP addresses does not meet the requirement to make information available to the public free of charge.
This is an interesting one too. I’m not sure about the technology here (I know, I should be, but we all have our limits), but does this mean a “point to point” so-called “leased line” is also no longer allowed? That was the only case I can think of where you would have to register your IP address?
Publishing information in a format that prevents users to read, use and copy the information
ESMA calls out some more specifics in this section:
ESMA does not consider that publishing post-trade data as an image..meets the requirement of making data available free of charge.
(emphasis mine). ESMA also state what they expect to see being published:
[A]n electronic format that can be directly and automatically read by a computer… by any potential user.
That sounds like CSV files to me.
Searching, Slicing and Deferrals
It was so frustrating in January that the data was so near and yet so far away. The data was there but unusable. The search function particularly applies to venues listing OTC derivatives, which I guess must now have about 10^9 outstanding ISINs:
ESMA does not consider that publication arrangements whereby market participants are required to submit search queries in order to access limited portions of the data (e.g. ISIN-by-ISIN searches, limited time periods) meet the requirement of making data available free of charge.
ESMA is of the view that the information should be available for a reasonable time and at least for 24 hours.
ESMA recalls that the obligation to make available post-trade data free of charge 15 minutes after publication applies also to transactions benefitting from a deferral.
Stop the Race to the Bottom, reach for the Gold Standard.
Okay, I’ve stopped quoting ESMA now. In our opinion the industry should sit up and listen to the guidance rather than waiting for disciplinary action from their local authorities.
The intent of the law is now crystal clear.
We saw with the original BGC Fenics data offering that firms were ready to make substantial amounts of data freely available from day one. And then the race to the bottom started.
That needs to stop today.
And let’s take it one step further than the prescribed regulatory guidance. Let’s introduce a simple data template that saves everyone time, money, and headaches.