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• All FX Derivatives are in scope (TBD).
• Trading compliance required in 2014 (TBD).

MiFIDII

MiFID a Brief History

The Markets in Financial Instruments Directive (commonly referred to under the acronym MiFID) is a legislative regulation directive, composed by the European Union (EU) on the basis of advice provided by the European Securities and Markets Authority (ESMA). The directive is intended for application by the European Member States, their regulatory authorities, and financial firms and institutions registered within the European Economic Area (EEA). The legislation is for:

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• MiFID II will compel HFT firms engaged in proprietary trading to be authorised under MiFID. 
• Introduce system and control requirements on the use of algorithms, HFT firms that are also making into trading venues using automated strategies will be required to enter into market making agreements with the venues. This measure is an attempt to ensure that market participants provide liquidity on a consistent basis.
• Trading venues will be compelled to set limits on the maximum number of order messages that any market participant can send relative to transactions they undertake.
• Trading venues will be compelled to set a minimum incremental 'tick size' this is presently done on a venue by venue voluntary basis (It should be noted that this is presently widespread within FX).
• There will be an introduction of controls on venue pricing to ensure transparency and the levelling of any discriminatory or penalising practices, in addition to controls on excessive order messaging.

MiFID Requirements (Draft)

MarketFactory will play a role in the reporting regimes that the regulations impose on market participants, as the customers do not retain the original protocol messages from the venues. The Financial Conduct Authority (FCA) draws attention to this under article (26) of MiFIR:

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