oracle’s information architecture for the markets in financial instruments directive (mifid) pal...

Oracle’s Information Architecture for the

Markets in Financial Instruments Directive (MiFID)

Pal RibaricsEU Enlargement Countries Solution [email protected]+36 309 712 028

MiFIDIndustry Drivers

Introduces a consolidated regulatory framework for European markets in financial instruments

Retail Investor Protection

Investment Services ‘passport’ to market transparency

• Part of the EU Financial Services Action Plan (FSAP), one of the Lisbon 2000 Strategy reforms to create a single market for wholesale financial services

• Supercedes the EU Investment Services Directive and is often referred to as ISD2

MiFIDScope

• Businesses• Securities and Futures Firms (including Asset

Managers, Investment Banks, Brokerages, Private Banking, Hedge Funds etc.)

• Retail Banks and Insurance Firms conducting securities business

• Multi-lateral Trading Facilities (MTF’s) including ATS’s and ECN’s (alternative trading systems)

• Regulated markets and investment exchanges• Asset Classes

• Equities, bonds, energy, derivatives and money market instruments

MiFIDProvisions

Passporting Rights• Improves operation of single passport for investment activity• Firms able to establish branches in other member states and offer cross-border services• Host country responsible for ensuring compliance with conduct of business requirements

Conduct of Business• Extensive and requires significant changes to the FSA's Handbook• Most sensitive is requirement for firms to conduct full suitability test on clients when providing investment advice or portfolio management

Pre-trade Transparency• Establishes minimum standards of pre-trade transparency for shares traded on regulated markets and MTFs• Obliges systematic internaliser to undertake public market-making obligation - must provide definite bid and offer quotes in liquid shares for orders below 'standard market size'

Post-trade Transparency• Whether on regulated markets, MTFs or OTC, trading in shares are subject to a post-trade transparency obligation

Best Execution

• Firms must ensure best possible deal for clients taking into consideration price, cost, speed and likelihood of execution and settlement

MiFID

MiFIDBusiness Impact / Benefits

• Widely accepted that net effect will be profit margins competition diversification consolidation

• Benefits for Investors are clear …• More choice on where to trade securities• Lower cost of entry and increased flexibility• High level of protection and quality of execution• Enhanced transparency across all venues

• … but are there any benefits for firms?• Encourages Pan European securities trading• Coherent and risk-sensitive framework for order execution• Seek competitive advantage by reviewing business model and drive

new value propositions• Revenue generation associated with new business opportunity• Cost saving - proactive approach to managing regulation

MiFIDKPMG Survey, 2006

Our Approach

Oracle’s approach to MiFID has been to identify and align relevant technologies as

components of a compliance information architecture whilst in parallel, working with industry and partners to develop specific

solutions as the regulation matures.

Data Management

MiFID Data ManagementEvidence

20%

44%36%

Unified system Separate systems Don't Know

Do you have a unified storagestrategy for storing best execution data?

MiFID Readiness Survey

What do you expect will happen to reference data management within six

months of MiFID taking effect?ISITC Autumn Conference

4%

41% 41%

4% 0%9%

Same Up 0-50% Up >50% Dow n 0-50% Dow n >50% Don't Know

Global Custodian Sep ‘05

“… there are implications for the data structuresthat firms will rely on to support the blizzard of datathat will result from the directive”, Global Custodian, Sep ‘05

“Storing it away is one thing, reconstituting data for audit purposes is another”, MiFID Readiness Survey, Oct ‘05

“MiFID … may spark a bonanza for data management specialists”, Reference Data Review, Oct ‘05

MiFID Data Challenges• Standards

• Data representation and messaging protocols

• Volume• Market data, trade reporting, transaction reporting, client order handling,

record keeping

• Latency• Pricing engines, publication infrastructure, decision support, algorithmic trading

• Lifecycle• Record keeping, reporting provisions, reconstitute best execution

• Quality• Revise customer agreements, client reclassification, suitability tests

• Orchestration• Order execution policies, auditable conduct of business and best execution,

automate front end to deal with volume

• Access• Operating with consistent view of business operations, management and

client reporting e.g. trade cost measurement for best execution

Information Architecture

ChallengeRecognise regulation as an opportunity• Improve business performance• Improve shareholder value

Compliance Information ArchitectureTechnology that delivers control, visibility and efficiency required to meet dynamic changes to new governance or compliance mandate• Minimise cost of compliance• Seize competitive advantage

“Sustainable compliance for competitive advantage”

Grid Infrastructure

Apps Servers Databases Storage

Business Processes

Custom Legacy 3rd Party Web Services

Data Hub

Standard, GlobalBusiness DefinitionsOperational

Databases

LegacySystems

DataWarehouses

Applications

Information Access

Voice Mail eMail Desktop PDAs Wireless Web Portal

MiFIDCompliance Information Architecture

Grid Infrastructure


Business Processes


Data Hub


Databases

LegacySystems

DataWarehouses

Applications

Information Access



Grid InfrastructurePreserve investment in existing data management assets• Increase scalability & availability (Oracle Real Application Clusters)• Improve decision support with real-time data access (Oracle TimesTen)• Manage & analyse more data, more efficiently (Oracle OLAP, Data Mining & Partitioning)• Manage the information lifecycle (Oracle Database 10g)

Grid Infrastructure


Business Processes


Data Hub


Databases

LegacySystems

DataWarehouses

Applications

Information Access



Data HubsProvide a real-time, consistent, single source of truth, for decision support, client and management reporting• Improve quality of client and market information across analytical and operational sides of the business (Oracle Data Hubs)• Synchronise data across multiple legacy transactional systems (Oracle Fusion Middleware - Integration) • Integrate unstructured data such as voicemail, email and documents (Oracle Collaboration Suite)

Grid Infrastructure


Business Processes


Data Hub


Databases

LegacySystems

DataWarehouses

Applications

Information Access



Business ProcessesImplement a service oriented process framework capable of supporting an increasingly dynamic regulatory environment• Provide full auditability of conduct of business and best execution processes (Oracle Fusion Middleware – BPEL & BAM)• Improve agility and business performance by automating volume and focusing on high value exceptions (Oracle Fusion Middleware – BPEL & Rules)

Grid Infrastructure


Business Processes


Data Hub


Databases

LegacySystems

DataWarehouses

Applications

Information Access



Information AccessProvide employees and clients with comprehensive reporting, query, and analysis capabilities they need to plan, execute, and measure• Address management and client reporting requirements e.g. trade cost measurement (Oracle Business Intelligence) • Address best execution obligations by assessing factors such as cost, speed and likelihood of execution and settlement in real-time (Oracle Fusion Middleware – BAM)• Drive new business by redefining execution capabilities through innovative distribution channels (Oracle Fusion Middleware - Portal)

MiFID Information ArchitectureMiFID Overlay

Delivers control, visibility and efficiency required to meet dynamic business change

• Minimise cost of compliance• Seize competitive advantage

Protect Existing IT Investments Achieve Sustainable Compliance Secure Competitive Advantage

Solutions

InfrastructureHewlett Packard*, Intel*, Pillar Data Systems*, Sun Microsystems*, Dell, BT Radianz

Compliance / Risk ManagementMantas*, Qumas*, Finsoft*, Capco, Reuters, BCS Group

Oracle MiFID Partner CommunitySolution Propositions

Best Execution• Client Order Handling – vendor led propositions with Peter Evans*, Coexis*, Calypso, Fidessa, GLTrade, PatSystems, • Policy – preliminary propositions with Mantas*, iFlex*• Trade Execution Analysis – preliminary propositions with Siebel*, Conchango*

Pre-Trade Transparency• Pricing – Preliminary independent propositions with eTrading Solutions*• Publication – preliminary independent propositions with Archontech*, Gissing*, Caplin • Dissemination – preliminary independent propositions with KTS*, Thomson Financial*, SMARTS, Reuters

Conduct of Business• Client Onboarding / Suitability – well developed proposition with Mantas*, Edge IPK*, Identrust*, Simplex Consulting*, Omgeo• Content Services – independent preliminary propositions developed with MetaMatrix*, Mobius*, Xenos*• Client Reporting – preliminary proposition with Kurtosys*, SeeWhy*, Vermillion

Consulting / Systems IntegrationAccenture*, BearingPoint*, Capco*, Cap Gemini*, HCL* Huntswood Consulting*, Thales*, CSTIM, Atos Origin, Deloittes, Patni

Post-Trade Transparency • Transaction / Trade Reporting – well developed independent propositions with eFlow*, Rule Financial*, Coexis*, Omgeo, GL Trade

MiFID

* Active MiFID Engagement

EFLOW LAUNCHES REAL-TIME TRANSACTION MONITORING AND AUDITING SOLUTION FOR MiFID COMPLIANCE

Transaction Tzar™ is the only complete solution to provide end-to-end transaction monitoring and real-time reconciliation facilities through a single dashboard.

Transaction Tzar™ monitors and reports on all asset class transactions for the capital markets, enabling a trade-centric view of the entire transaction lifecycle.

4th May 2006 – London – eflow, the provider of trade transparency and transaction management systems to the financial markets, today announced the launch of its Transaction

Tzar™ solution from a seminar on MiFID held in conjunction with Oracle.

Partner solutions - EFLOW Database 10g, TimesTen and XML Publisher

oracle’s information architecture for the markets in financial instruments directive (mifid) pal...

Documents

investment banks

single market

insurance firms

futures firms

investment activity

european markets

investment advice

market transparencypart