In accordance with MiFID II, the European initiative to promote competition and enhance choice for investors across Europe, Systematic Internalisers (SIs) are investment firms which, on an organised, frequent, systematic and substantial basis, execute client orders against proprietary capital outside a regulated market, MTF or OTF without operating a multilateral system.
Firms that exceed the SI thresholds or choose to opt-in to being a Systematic Internaliser need to provide pre-trade transparency. The level of the pre-trade transparency depends on a number of factors including the product for which quotes are being provided and size of the quote. While the SI regime under MiFID was restricted just to equities, MiFID II expands coverage to equity‐like instruments, such as ETFs, and non‐equity instruments such as derivatives and structured finance products, bonds and emissions allowances. TRADEcho provides your firm with the tools to determine if you qualify as being a Systematic Internaliser and the platform to publish quotes if you are.
Are you a Systematic Internaliser? An investment firm executing client orders against own proprietary capital on a frequent and systematic basis may be classified as an SI and will be obliged to provide public, firm quotes. This is dictated by the asset class, liquidity, frequency and size in which you are dealing. TRADEcho SI Determination Service calculates your status for each instrument and keeps you informed of your SI status.
In support of MiFIR/MiFID II pre-trade transparency obligations, the TRADEcho service supports the publication of Systematic Internaliser (SI) quotes via LSE market data channels, and on https://quotes.tradecho.com/. With TRADEcho's SI Quoting you can validate your quotes and publish them via the LSE market data channels or the TRADEcho website. TRADEcho has no intention of commercialising our clients pre-trade SI quote data.
MiFIR/ MiFID II regulation introduces the requirement for investment firms and venues to make public trading activity. The regulators aim to create a fair market place in which all participants have sufficient data to make informed investment decisions. Thus, trading venues and investment firms must publish details of transactions as close to real time as technically possible, Equity & Equity like = within 1 minute Non-Equity = within 15 minutes (reducing to 5 minutes).
In some circumstances, the immediate publication of a trade could lead to a reduction in liquidity and also increase execution cost for investors. Subsequently deferred publication is available where certain criteria is met such as it being a large trade or a trade in an illiquid product. Flags must also be populated on post-trade reports to provide more information to the subscriber, for example, the time, price, volume and venue of execution. The responsibility of correctly reporting trades, rests firmly with the financial firm.
Smart Report Router (SRR)
TRADEcho’s SRR determines if and when the buy- or sell-side counterparty should publish the trade and, when there is a requirement, routes that trade to an Approved Publication Arrangement (APA) of choice for publication. The SRR is APA agnostic which means that firms can use alternate or multiple APAs to make trades public. By using SRR, instead of connecting directly to multiple APAs, firms achieve flexibility while keeping costs down.
Approved Publication Arrangement (APA)
Under MiFID II, details of transactions are to be made public as close to real time as technically possible, within one minute for equity and equity-like instruments and fifteen minutes for non-equity instruments. TRADEcho operates as an Approved Publication Arrangement (APA), applying relevant deferrals to provide the market with a clear and concise tape of your trades. Trades are published across all asset classes in line with the regulatory reporting timeframes. Deferred publication may be authorised for certain trades that would expose liquidity providers to undue risk.
TRADEcho Assisted Reporting allows a broker to submit an ‘Assisted Report’ which is published under the buy-side firms APA Agreement. This means that a buy-side firm has real-time visibility to monitor the reporting process but with low connectivity / development costs. It also means reporting is available for reconciliation and management information. Buy-side firms can also choose to employ a hybrid model determining which option based on an assessment of each brokers capabilities to provide a Trade Reporting Service.
TRADEcho lite provides firms with limited trade reporting requirements with the tools to meet their pre and post-trade reporting obligations under MiFID II in an efficient manner. The lightweight service has been designed for firms looking for a cost-efficient solution to meet their MiFID II transparency obligations. The service covers all MiFID II asset classes and is accessible over the internet, allowing firms to manually report trades directly via the TRADEcho portal.
Reference Data Services
TRADEcho services are supported by the reference data needed to utilise our transparency services. Our partner UnaVista is the source of our reference data. This includes but is not limited to; MiFID II Universe of instruments, LEI codes, CFI and ESMA taxonomy levels, NCA instrument suspensions, list of Systematic Internalisers.
The TRADEcho Portal sits across all services and has been developed based on 10 years of client feedback. It offers customizable dashboarding, anonymised benchmarking and provides trend analysis to identify changes in reporting over time, by asset class and by desk. It acts as a primary tool for Traders, Compliance and Regulatory teams to enter trade reports, enter SI quotes, manage exceptions and interrogate the data sent to the service.