Forexware is Ready for MiFID II

by Lawrence Fayman

Tue Oct 17, 2017


Forexware is Ready for MiFID II

 

In April 2014, the European Parliament approved MiFID II – an updated version of the original MiFID Regulation – with the main objectives to increase consumer protection and competition in financial markets. The new update significantly expands the requirements of the original MiFID directive to cover a larger number of companies and financial products, and is set to take effect in January 2018. While Spot FX is not a financial instrument under MiFID II definitions, new requirements instruct that Spot FX trades should be executed using the same principles as any other financial instrument covered by MiFID II. These requirements may be a game-changer for the FX marketplace, and Forexware is ready to fully comply with them.

 

Forexware has had systems in place that adhere to the best execution policy been for many years and our systems comply with the new MiFID II requirements. We’ve been striving to be up-to-date on all legislative developments even before the law becomes effective. That means, we have been fully compliant with the changes introduced by MiFID II such as the best execution policy and transaction reporting.

 

Complying with the Best Execution Policy

 

The “best execution” policy is one of the key changes in MiFID II, and requires that firms take all “necessary steps” to obtain the best possible trading conditions for their clients.

 

Under Article 64 of the MiFID II Regulation, firms are now required to check the fairness of the price proposed to their clients by gathering market data that relates to the price of a product or OTC financial instrument. In contrast to MiFID, firms are now explicitly required to ensure that all necessary market checks are performed on a systematic basis and embedded in their policies and practices.

 

This does not only mean offering the best spread and execution price, but also includes “costs, speed, likelihood of execution and settlement, size, nature or any other relevant consideration,” as stated in Section 7, Article 65.

 

At Forexware, we have taken all necessary steps to ensure compliance with the “best execution” policy and to continue to offer best possible market conditions to our clients.

 

Amendments to Transaction Reporting

 

In addition, MiFID II introduces significant changes in transaction reporting, which now requires an expansion of the set of information available on a given transaction and the full harmonization of the format of the reports across the EU.

 

At Forexware, we fully comply with all amendments and new requirements set by MiFID II, such as best execution policy, transaction reporting, pre- and post-trade transparency and client order handling – and all our systems are ready for the updated Directive by the date the new regulations are set to take effect.