In MiFID II-related news, Linedata expands ties with the DTCC, Smartkarma launches a London office to push a digital network for compliant research, and Third Financial bolsters its Tercero offering.
(Editor’s note: With the MiFID II deadline about 100 days away, FTF News will be running an ongoing roundup of IT and operations news related to the market reform legislation.)
Linedata & the DTCC Extend a 10-Year-Old Relationship
With the MiFID II deadline looming, Linedata, a vendor of investment management solutions, has extended a decade-old partnership with the DTCC via the launch of an upgraded interface between DTCC’s platform for central matching, Central Trade Manager (CTM), and the Linedata Longview order management system (OMS), officials say.
“Linedata’s partnership with DTCC allows asset managers and hedge funds, using either deployed or hosted versions of Linedata Longview, to directly interface with CTM, which is a major component of DTCC’s Institutional Trade Processing product suite,” according to Linedata. The link will help users “send trade allocations to their broker/dealers and automatically generate affirmations for matched trades in real-time. … Users also benefit from connectivity to DTCC’s OASYS, its U.S. domestic trade allocation and acceptance service that communicates trade and allocation details.”
In addition, Linedata will facilitate matching via new support for the Extensible Markup Language (XML) interface that “allows Linedata clients to match transactions across extended asset classes, including cash and fixed income instruments as well as futures, options, equity swaps (contracts for difference) and repurchase agreements (repos), allowing users to process multiple asset class trades on a single platform,” officials add.
“The new interface leverages CTM’s latest PUSH technology, which pushes messages to clients in real-time as opposed to legacy technology that pulled messages on a scheduled basis,” officials add. “By leveraging MQ connectivity, Linedata can now more efficiently connect clients to their hosted OMS version, thereby avoiding the installation of older, FIX-based CTM interfaces into their environments.”
“Linedata is a strategic partner, and we work closely to ensure that our over 50 mutual clients can seamlessly connect from Linedata Longview to DTCC’s CTM, which includes commission reporting features to meet MiFID II obligations. By upgrading their interface, our mutual clients can now do more in less time at lower cost in an environment of increasing global regulatory requirements,” says Matthew Nelson, managing director of Institutional Trade Processing at DTCC, in a statement.
Smartkarma’s London Office to Push Research via Digital Network
Smartkarma’s new UK office leads call for expert, independent research providers in Europe to join its collaborative, digital ecosystem
Smartkarma, a provider of independent investment research to Asia, is breaking ground in the U.K. via a new office in London that will serve as a hub “to build out its independent research analyst community in Europe and support its buy-side investor clientele,” official say.
In fact, Arzish Baaquie, who joined the firm in 2014 and has led the Special Situations offering, will oversee the growth of Smartkarma in the U.K. and will build a team “based in Baker Street, London,” officials say.
The move is in anticipation of the MiFID II January 3, 2018 deadline, which is “forcing transparency around the supply and payment of research,” officials say.
“The goal for European regulators is the ‘unbundling’ of research; rather than assets managers receiving research ‘free’ from banks alongside trading revenues, it must now be transparently and fairly priced and paid for,” company officials say.
“The research industry is under significant stress from MIFID II, and it is no secret that we plan to take full advantage of this fractured market. Our transparent subscription model and open access to the complete ecosystem of research and analysts means that investors are MiFID II compliant and can access independent research through an innovative, cloud-based platform,” says Jon Foster, co-founder and chairman of Smartkarma, in a statement.
Smartkarma officials add that innovation “has been slow within the research sector, generally limited to research aggregators and traditional banks uploading current offline offerings online.”
The Smartkarma cloud-based, network approach is similar to the way that “other digitally disrupted industries, such as music or transport” have adjusted. “Currently, with over 400 independent analysts based across 15 Asian markets, investment managers globally can take advantage of Smartkarma’s expert insights, delivered when and how they need it. This network is now set to expand across Europe to extend the benefits of the platform with further local, in-country coverage,” according to the company.
Smartkarma’s analysts and experts “coexist and collaborate on the Smartkarma platform,” providing access to investment managers needing independent and unbiased research and advice from the authors that created it, officials say.
“We are the largest provider of independent research in Asia with over 400 analysts and I have been selected to help replicate that success in Europe,” says Baaquie, whose official title is head of UK at Smartkarma, in a statement. “We are rapidly expanding our network of insight providers across Europe and establishing operations in London is a natural next step.”
Third Financial Bolsters Tercero Software to Meet MiFID II Standards
Third Financial Software (TFS) has completed a “major release of its award-winning Tercero software,” which will focus on “several key pillars of compliance under the forthcoming MiFID II regime, officials say.
In addition, TFS will be upgrading customers to be “in line with the regulatory changes.”
By building “these significant and essential enhancements into the core foundation of our Tercero software, we drew on contributions from multiple investment firms and external consultants, including PIMFA, and developed the most relevant and useful solution for the wide range of regulatory requirements under MiFID II,” says Ricky Ali, managing director for TFS.
In particular, the new release targets all of the essential MiFID II-related requirements, including “a successful joint Transaction Reporting validation test with UnaVista which reinforces Tercero’s flexibility to support the correct identification of Legal Entity Identifiers (LEI) in all known scenarios, officials say. “To complement this key regulatory reporting ability is a function for daily monitoring of portfolio performance such that a depreciation of 10 percent or more over a reporting period would alert the relevant account executive via the existing well-proven exceptions-based Tercero compliance engine.”
To meet “another key element of MiFID II, TFS has expanded on an existing capability within Tercero for pre-trade and post-trade compliance to support the concept of complex and non-complex securities,” Ali says. “In addition, we are working collaboratively with various other firms to ensure there is an appropriate and compliant provision for annual costs and charges disclosure and best execution monitoring.”
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