A leading global trade association has sent an open letter to Europe’s regulators highlighting problems its members have found with the transparency of the securities markets in Europe post-MiFID’s implementation. The letter, written by the Financial Information Services Division of the Software & Information Industry Association (FISD/SIIA), includes recommendations and calls for action from regulators.

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Nine securities industry associations have drawn up a 10 point plan aimed at improving transparency in the securitisation markets.

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According to research by consultancy group Tabb Group, 100% of UK-based asset managers have witnessed a decrease in transparency since MiFID took effect in November last year.

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The buy side is getting increasingly uncomfortable with the state of post-trade data under MiFID, but regulators seem reluctant to take action, according to speakers at this month’s Euromoney Third MiFID conference in London.

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The Committee of European Securities Regulators (CESR) has reopened its investigation into whether MiFID’s transparency rules should be extended to asset classes beyond equities.

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Reuters has introduced a fee for access to its consolidated ‘.x’ RIC, and has increased post-trade data sources to include OTC trade reporting feeds from Xetra, Euronext and OMX.

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In its Financial Risk Outlook 2008 (FRO) the UK’s Financial Services Authority (FSA) has highlighted MiFID’s part in consolidation and fragmentation risks facing capital markets and exchanges. These include a potential loss in transparency for both regulators and market participants due to fragmentation, and a dip in market confidence if MiFID is not properly monitored and enforced.

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One speaker at this month’s public hearing on non-equities transparency under MiFID cited recent market turmoil as proof that greater transparency is needed in the non-equities markets, saying “this argument of absence of market failure is difficult to buy in these days of financial markets turmoil due to failure in the US subprime market”.

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As its ‘sister’ initiative, Project Turquoise, was attacked by the buy-side community for a lack of transparency about its progress, the Project Boat consortium to build a trade-reporting wholesale utility appears to be keeping up with its own milestones and last month issued an extensive Boat Service Offering document.

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Driven by European clients already using its technology to build applications for the post-MiFID environment, Wombat Financial Software is packaging key elements of its platform into a MiFID solution aimed at helping firms gain a competitive edge once the regulation is in force.

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Interactive Data Corp. is levering the assets of its Real-Time Services and Pricing & Reference Data operating units to offer a range of services aimed at helping clients meet their obligations under MiFID. The U.S. financial information services supplier believes it can help customers fulfill MiFID requirements covering pre- and post-trade transparency, evidencing best execution, trade venue selection and reviews of order execution policy, code of conduct and client classification obligations, transaction reporting, managing conflicts of interest and managing risk.

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Having spent 2 ½ years in preparation, Deutsche Boerse is in implementation phase for its planned MiFID OTC Post Trade Transparency Service, which will offer users of its Xetra trading platform access to post-trade price information for securities traded over the counter and qualifying for MiFID post-trade reporting regulation.

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A new paper on MiFID’s impact on the market data marketplace concludes that the FSA’s plan to require trade data vendors to be certified is a bad idea, that there is no need for a U.S.-style consolidated trade ticker, and that, generally, the market is capable of adapting on its own.

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The group of primarily German/Austrian and French banks that have been quietly discussing plans for a pre- and post-trade transparency utility since late last year – under the working title Yellow Submarine, or Project Yes – is expected to decide on major structural and technology elements of the venture in the next few weeks.

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Reuters has become the first of the major market data vendors to step into the breach and offer up data solutions for the forthcoming EU Markets in Financial Instruments Directive (MiFID), which comes into force in November. With its MiFID offerings, Reuters is leveraging its existing core business activities, and as such will be addressing the pre- and post-trade transparency requirements and those surrounding best execution.

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The market had its first taste of MiFID guidelines and recommendations to contend with this month as CESR released two Level 3 papers addressing data publication, and consolidation of transparency data and list of minimum records (CESR/07-043 and CESR/06-552c). The papers contain relatively few surprises when compared to the original consultations (MiFID Monitor, November 2006). But some respondents might be disappointed that challenges on the legal basis of items on the list of minimum records have been rejected and that transparency will have to be achieved as close to real time as possible, with three minutes being deemed allowable in exceptional cases only.

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Meanwhile, again with an eye on MiFID’s forthcoming requirements, Deutsche Boerse has introduced more transparent pricing for its equities trading, clearing and settlement services. The move is to comply with the first step of the European Code of Conduct for clearing and settlement, and affects a range of functions at Deutsche Boerse, including the Xetra and Xontro (trading floor) trading systems, the central counterparty for equities operated by Eurex Clearing and Clearstream’s respective settlement and custody business. The move will allow clients to compare costs for equity transaction services, a capability that may be incorporated into institutions’ best execution policies under MiFID.

With the forthcoming version 5.0 of its Financial Information Protocol (FIX), FIX Protocol Ltd. (FPL) aims to provide increased functionality to meet transactional requirements in a post-MiFID environment.

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In its analysis of MiFID benefits for the FSA, consulting firm Europe Economics estimated that overall, U.K. systematic internalizers (SIs) could realize up to £25 million from the sale of their market data. Other firms will also benefit from costs savings as MiFID-induced competition between data publishing venues drives prices down.

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The Financial Information Services Division (FISD) of the Software & Information Industry Association (SIIA) has released a follow-up white paper covering the price transparency requirements of MiFID. The paper – issued on behalf of the MiFID Joint Working Group’s Real-time Market Data Subject Group – follows the group’s discussion of post-trade transparency in an earlier version of the paper published late last year.

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