Timestamping Opportunities from the MiFID II Delay
There is great opportunity to be had in implementing accurate time stamping, ahead of the new 2018 deadline for MiFID II. But before we can begin to reap the benefits, we must first understand the options for obtaining and integrating accurate time. Picking up where we left off, the next step is determining how to ‘connect’ your time source with your internal trading applications? Again, there are two options:
- Application-Level Integration
With the additional year now allotted for implementation, firms may also consider approaching this one application at a time. Taking the extra time to dig into their internal systems to optimize each application, implementing time stamping within each. This may appeal because the task can be broken down into manageable chunks, but there is no guarantee this will meet the microsecond MiFID II requirements as the challenge will still lie in making sure that each of your applications, now with disparate time stamps, are in sync. Given the additional time and internal resources this effort will take, it is costly and may create an end-result that is far from the seamless reporting audit trail mandated by the regulators.
- Network-Level Integration
While tackling the time synchronization challenge at the network level may seem to be the most complex option, network hardware manufacturers have made the integration of time relatively straightforward for firms today. The real challenge lies in choosing a robust time source and integrating it properly with your network environment. As stated in our previous post, GPS time, whether DIY or outsourced, has several major hurdles in the form of cost, maintenance, reporting, and the required expertise.
Partners such as Perseus offer turnkey solutions that may well provide the fastest-to-market, cost-effective and overall comprehensive solution. We’ve already done the heavy lifting for you – implementing a global time service that leverages redundant infrastructure such as grand master clocks and network switches across 9 data centers representing the global financial hubs. Perseus PrecisionSync delivers the required precision in timing and connectivity, geared specifically towards the ultra-low latency markets we specialize in offering Time-as-a-Service via a single or redundant connection to the network, minimizing the potential for down-time or loss of sync. Our proprietary and audited time delivery service, PrecisionSyncTM, is synchronized to UTC and meets the needs of HFT firms where the fastest execution also requires more strenuous standards of time compliance while eliminating the costs and supportability concerns around GPS. With Service Level Agreements designed specifically for those under stringent regulatory requirements, Perseus PrecisionSync offers a fast, simple and affordable solution that provides a high level of accuracy combined with a higher level of safety than can be achieved by building your own, in house, timing solution.
As discussed in a previous post, most large financial services firms employ systems in multiple data centers and send orders to dozens of exchanges around the world, making it critical to have a singular, synchronized source of time across your entire global network. Beyond the granularity of data sought by ESMA regulators, time stamping can provide financial services firms a huge opportunity for optimization and efficiency throughout the trade lifecycle and across their entire global infrastructure. This level of data creates not just a regulatory quick-fix but delivers powerful performance metrics that can allow firms to analyze transactions costs and slippage across exchanges in different data centers.
Plan For the Worst Case
While seemingly complex, products like PrecisionSync make it easy for firms to maintain a holistic and exact view of their operations across the globe, providing the detailed data to make smarter and better decisions. For these reasons, the timestamping mandate will create benefits to the industry as whole that far exceed the original regulatory vision. Tackling this sooner rather than later can be an an easy win in terms of MIFID II preparation, delivering tangible business benefits in the meantime. Free up your resources to focus on the more challenging MIFID preparations and keeping your business running like clockwork.
This article was published in TabbForum 04/15/2016 http://tabbforum.com/opinions/keep-the-clocks-ticking-part-3-timestamping-opportunities-from-the-mifid-ii-delay?ticket=ST-14743759583407-XUh9U4RBiQKBftURuqgask8goSrM418IRo7beGZY