Earlier this week, Germany's Deutsche Borse and Chi-X Europe, a Pan European alternative trading system, operated by a subsidiary of Instinet, each said they received regulatory approval to offer a trade reporting service for off-exchange equity trades. With Markets in Financial Instruments Directive going into effect on November 1st, competition is heating up among the various players seeking to offer a trade-reporting service.The German exchange and Chi-x, said the Financial Services Authority (FSA) granted them Trade Data Monitor (TDM) authorization to offer a trade reporting service for a broad range of OTC equity trades. The new TDMs are expected to shake up the status quo and introduce more competition for trade reporting and other market data services.
Prior to DB and Chi-X gaining the trade reporting license, the London Stock Exchange, Plus Markets, also a recognized exchange, and Reuters were the three remaining TDMs approved by the FSA. Now with the FSA's approval, DB can offer MiFID OTC post-trade transparency services to its British clients, states an exchange executive in the release.
Under MiFID's post-trade transparency rules, professional market participants will have a choice when they execute their off-exchange trades as to whether they want to print those trades on a TDM or an exchange, explains Hirander Misra, director of Chi-X Europe Limited in an interview today. "Those investment firms don't necessarily have to report to the TDM," Misra notes.
Prior to MiFID, firms had an obligation to report those trades to a recognized investment exchange and typically that would be the London Stock Exchange in the U.K. However, by reporting then to an authorized TDM, "they know that particular destination is an approved reporting venue and therefore it gives them a lot of comfort knowing they will be in compliance with MiFID," he says. The Chi-X TDM will cover off-exchange trades and electronic-order-book trades executed on Chi-X, says Misra.
Chi-X said it would launch the trade reporting service immediately, for a monthly flat fee of 210 British Pounds (or $428 USD) per client per connection. Chi-X will not impose additional charges beyond the flat fee for market data, license fees, data feed fees or message or volume traffic. Misra says the market data is free. "There are no per message charges to submit the trade reports, so you can submit as many trade reports as you like," says the Chi-X executive.
Up until the current crop of TDMs emerged under MiFID, market professionals had to pay to submit trade reports and also had to pay fees to receive market data back from the exchanges. There are also no additional fees to distribute the trade data. "The other key advantage is that we facilitate trade reports via FIX," says Misra, which he says is equivalent to using open source messaging standard. Chi-X says it will provide a real-time, FIX 4.4 trade data feed to participants and vendors and will receive submitted trade reports via the same format.
Following Instinet's move, media reports say that Boat, a new trade reporting start-up owned by a consortium of investment banks, will offer its real-time dataset free of charge until Jan. 1, 2008. This will allow end users to assess the Boat data before it becomes a fee paying service. Despite industry gossip about the FSA not yet approving Boat's new trading reporting service, Boat TDM application is in process, a spokesman told Finextra.Earlier this week, Germany's Deutsche Borse and Chi-X Europe, a Pan European alternative trading system, operated by a subsidiary of Instinet, each said they received regulatory approval to offer a trade reporting service for off-exchange equity trades. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio