Industry participants have developed common standards that will restore post-trade transparency in the European equity markets

Industry participants have developed common standards that will restore post-trade transparency in the European equity markets

24/01/2012

Industry participants have developed common standards that will restore post-trade transparency in the European equity markets.

The key benefits of the MMT are:

  • To enable investors to accurately monitor market events by standardising how these events are identified across a fragmented market for the first time since the introduction of MiFID and it offers a practical solution ahead of MiFID II.
  • Swift adoption of standardised trade data through a comprehensive translation facilitated by market data vendors on behalf of their users.
  • MMT delivers on the industry’s commitment to address the pressing need to deliver a substantial action for an efficient and, comprehensive tape of record for users of the EU Single Market.

Today the industry project called Market Model Typology (MMT) has announced the availability of the official MMT 1.0 mapping release. This significant milestone provides a strategic bridge to implementing European equity post-trade standards in order to enhance market transparency. MMT provides a translation between legacy trade reporting flags to a newly defined single market standard. The translation is being adopted by MMT participating vendors on behalf of investors who seek clarity in monitoring market activity. The MMT translations have been developed and are being maintained by MMT exchanges and trade reporting venues on behalf of market participants until these standards are adopted natively by each venue. The result of this initiative provides an industry-led solution to a well-documented challenge caused by a combination of market fragmentation and an inherent lack of standards. 

A broad spectrum of the industry, FESE members, LSEG, BATS Chi-X Europe, Markit Boat and market data vendors: Thomson Reuters, Bloomberg, Fidessa, NYSE Technologies and SIX Telekurs, have built on the trade reporting standards for Over the Counter (OTC) trade reporting initiated by a joint industry working group under the auspices of the Committee of European Securities Regulators (CESR), now European Securities and Markets Authority (ESMA).

This MMT initiative provides an immediate solution for users of consolidated data from the participating Regulated Markets and MTF’s through the various applications provided by the participating data vendors. This is a significant step forward in the efforts to standardise trade data and allows investors to accurately monitor market activity. The clarity provided will also help inform users on the on-going efforts and prove the benefits of standardisation.

Future Milestones and Next Steps:

  1. Already underway are further efforts by exchanges to adopt MMT natively within their datafeeds allowing direct feed users to also benefit and to relieve the market data vendors from applying the MMT translations on behalf of their users. Future announcements on native adoption progress by FESE members will be communicated in due course.
  2. Perhaps the most significant remaining work involves the definition and implementation of trade reporting requirements for OTC market participants. Cited by the CESR Joint Industry Working group as necessary work which was not accomplished by the working group within the mandated timeframes. This effort requires the industry and regulators to work together to ensure that the standards for trade data are consistently applied during trade reporting by OTC market participants and validated by trade reporting venues. FESE will participate actively in these efforts and FESE members who operate trade reporting platforms will also support these efforts and develop the necessary validation capabilities. Further updates will be posted on our website.

Click here – Equity data standards: Market Model Typology (MMT)