Making Markets Transparent

Trading generates large amounts of data. To ensure the quality is on par with the quantity, the Swiss Stock Exchange is actively involved in data standardisation initiatives. One such initiative is the MMT – short for Market Model Typology – which facilitates compliance with MiFID trade flagging obligations.

Industry efforts to promote common standards for post-trade data across asset classes subject to MIFID II (Markets in the Financial instruments Directive II) are continuing. Marc Berthoud, Head Exchange Data Strategy for the Swiss Stock Exchange at SIX, participated in a FIX Trading Community webinar looking at the key benefits which the FIX MMT standard delivers on post-trade data quality.

Successful Industry-wide Collaboration
The MMT initiative is a positive example of successful industry-wide collaboration, which saw a combination of trading venues, reporting venues, data vendors, buy and sell side firms come together to create uniform standards. Prior to the development of the MMT, there was no consistent data standard around trade flags. Each trading venue maintained its own set of flags while, in addition, data vendors implemented their own flagging logic. Without MMT harmonisation all stakeholders along the market data value chain would have implemented their own solution for compliance with MIFID II’s RTS (Regulatory Technical Standards) I and RTS II trade flagging obligations. This approach would have been compliant, but not standard, thus potentially triggering poor data quality and higher data processing costs across the industry.

MMT is an efficient solution to help the industry fulfil its trade flagging requirements.

Marc Berthoud, Head Exchange Data Strategy

Helping to Fulfil Regulatory Requirements
“The FIX MMT data standard is an efficient operational solution to help the industry fulfil its trade flagging requirements as outlined in MiFID II RTS I and RTS II. The MMT is subject to FIX governance, and it will be maintained as a useful, neutral and evolving standard,” said Berthoud. The MMT is being used increasingly across the market data value chain. A survey during the FIX webinar found that 36% of respondents use the MMT a lot of the time whereas 27% used it some of the time. Nonetheless, a sizeable minority of 36% told the survey that they did not leverage the MMT at all. “It is clear that we need to communicate and better educate the organisations that are not using the MMT standard,” he said.

Fortunately, the overwhelming majority of listeners do see significant value in the MMT. 93% told the webinar survey that they saw great value in the display and distribution of standardised trade flags such as the MMT, a sign which Berthoud described as very encouraging.

Boosting Transparency
The MMT already plays a major role in boosting post-trade transparency, an issue regulators have been concerned about. “Post-trade transparency typically informs on whether price information is valid or not; on what trading venue the execution took place; what type of market mechanism was used for liquidity pooling; whether the interaction between buyer(s) and seller(s) was bilateral or multilateral in nature; what level of pre-trade transparency was displayed before the execution; what level of timestamping accuracy is available for determining the exact sequence of executions; and whether there is immediacy or deferral of the trade publication,” added Berthoud.

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