Fixed income desks have major concerns as MiFID II looms

Forty-five per cent of European fixed income heads are still struggling with MiFID II compliance, despite the 3 January implementation deadline looming large, according to a new report: “On the precipice: Are you ready for MiFID II?”, by the Fixed Income Leaders’ Summit.

The findings of the report have been published ahead of the summit in Amsterdam on 8 and 9 November, where Rt Hon Nicky Morgan MP will deliver a Brexit keynote to over 700 attendees and over 350 buy-side heads of fixed income.
Twenty eight per cent of respondents are concerned with compliance with post-trade transparency requirements including trade and transaction reporting, while research unbundling (26 per cent), pre-trade transparency (25 per cent) and systematic internalisers (21 per cent) are also big concerns.
Sourcing liquidity however, is the biggest challenge facing fixed income leaders with 55 per cent of respondents listing it as a top three challenge for their trading desk, followed by sourcing and paying for reliable data (52 per cent) and increasing on-the-desk technology (51 per cent). Given these results, there is little surprise that 54 per cent see implementing technology as the biggest priority for fixed income trading desks. The need to source liquidity is also leading to increased buy-side collaboration with 78 per cent of respondents stating that they would be willing to partner with other desks.
Negotiations surrounding Britain’s exit from the European Union continue to rage on in Brussels. Whether Brexit will result in the displacement of London’s status as Europe’s financial hub is the cause of much debate. In the case of a hard Brexit (no deal), nearly 70 per cent of European heads of fixed income believe that London’s status as Europe’s financial hub will significantly diminish.
Oliver Kirkbright (pictured), Editorial Director for the Fixed Income Leaders’ Summit, says: “With the MiFID II implementation deadline upon us, the report paints a picture of a race against time with firms struggling with their preparations for January 2018. In addition, on-the-desk challenges such as sourcing liquidity, data and technology continue to be a high priority for heads of fixed income. Given the strong belief that hard Brexit will impact London’s status as Europe’s financial hub, it is excellent that November’s Fixed Income Leaders’ Summit in Amsterdam will welcome Nicky Morgan MP to the stage for a keynote Brexit speech.”