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ISIN: Why Timing is the Key to MiFID II Reporting

They say timing is everything in life. But as the clock ticks down to MiFID II, many financial institutions run the risk of leaving themselves in a race against time when it comes to ISIN reporting. But while certain firms may be concerned about not meeting all the requirements, banks can hardly blame their preparation on slow ISIN response rates.

Volume and MiFID II Reporting

According to a Tech & Ops consultation paper commissioned by ANNA DSB back in February, there is a maximum latency of 1,000 milliseconds for 99 per cent of all ISIN requests, and a burst rate of 60,00 messages per minute. Therefore, the concern for banks is not about the speed of information, more about how to gather the vast quantities of data needed to supply an ISIN code.

It is not hard to see why. After all, OTC contracts often incorporate far more detail that other securities, which is why ISINs need to be documented immediately under MiFID II. Whether it’s identifying the specific type of derivative and its issuer for each transaction, or reacting quickly to changes in a counterparty’s credit rating, an awful lot of information now needs to be reported.

This is why, with only 6 months to go until the January 3rd implementation deadline, financial institutions are seeking ways to remove this complexity and risk by providing a single repository for instrument, issuer, counterparty, reference and trade data for derivatives.

The good news

The good news is that banks can now deploy technology solutions that cover all the asset classes for which ANNA DSB is providing ISINs – including interest rates, equites, commodities, FX and credit derivatives. Implementing these solutions also enable banks to bring in data for the ANNA DSB Classification of Financial Instruments (CFI), a code which provides investors with a more granular detail into the type of derivatives being traded.

If this wasn’t enough, banks also need to consider the FISN (ISO 18774), a standardized Financial Instrument Short Name across asset classes, which will also be provided by the DSB ISIN request. Also, ToTV/uTOTV are driving reporting obligations, which we now cover and extend to ANNA DSB’s MiFID II data set.

Financial institutions that move now to deploy the right technology solutions will be best positioned to handle the diverse nature of derivatives. Particularly, as it will enable them to source, validate and distribute all client and counterparty details throughout the trading life cycle of an OTC contract.

As each day passes, only those financial institutions that act now will beat the MiFID II clock when it comes to ISIN reporting.

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