Designed to improve competition and level the playing field for investors, the EU Markets in Financial Instruments Directive (MiFID) and the US Regulation National Market System (Reg NMS) are poised to drastically change the way the global securities industry handles market data.
New research from TowerGroup finds that regulatory compliance will ultimately pave the way for firms to completely automate the trading process.
These mandates will require institutions and trading venues to store massive amounts of market data. As a result, TowerGroup believes these regulations could cause a 900 percent increase in the amount of market data being published by 2012.
“Discussion in the media has focused on the fact that these regulations mandate best execution, which misses the bigger picture,” says Tom Price, senior analyst in the Securities & Capital Markets practice at TowerGroup and author of the research. “The ramifications may not be felt immediately, but once Reg NMS and MiFID are final, they will have forever changed the way financial services firms treat data.”