OTC Pre-trade and Post-trade Transparency

The MiFID - Markets in Financial Instruments Directive of the EU Commission (Directive 2004/39 EC) - has motivated Wiener Börse AG to take the initiative to create a new product and service portfolio (TTR Transparent Trade Reporting) for its customers. The TTR System is an “Austrian solution” designed to meet the disclosure obligations of the MiFID for OTC transactions in a flexible and inexpensive manner.

TTR is a comprehensive IT solution designed for banks and investment firms of all sizes that serves to meet the disclosure obligations regarding OTC transactions (trades and limit orders) for European shares.

The software includes the generation, collection, processing and dissemination of data and boasts the following main functionalities and features:

• Three alternative entry modes for OTC transactions:

• Connectivity between the bank and Wiener Börse AG via a connection to a FIX engine at the exchange
• Availability of a Web GUI for manual data maintenance (entry of trades, orders, changes, cancellations, querying reports, etc.)
• Connectivity via Xetra 8.1

• Collection and processing of data (OTC limit orders and OTC trades) including all  required business logic (reference data management, delay logic)
• Anonymous dissemination/disclosure of data via the existing system architecture of Wiener Börse AG (ADH) to international data vendors
• The solution offers verified MiFID compliance, revision and contingency security, daily reporting procedures, and the availability of historic data

One way of implementing the transparency requirements is to outsource the entire process of data disclosure to Wiener Börse AG. The system creates the ideal conditions for the banking community and the capital market. The use of the TTR Transparent Trade Reporting system developed by Wiener Börse AG offers banks the following advantages:

• It can be employed throughout Europe (group-wide, subsidiary banks, sector-wide, etc.)
• It offers the option of disseminating data anonymously through the use of external infrastructure; TTR helps ensure that the banks meet their disclosure obligations, but without revealing their identity (or their trading strategy).
• It is simple to re-use the OTC transaction data from the trading and order execution systems in line with the best execution requirements
• It permits data dissemination using industry standards for protocols, record formats, etc. with the aim of maximizing re-usability and the further development of interfaces such as:

• Pre-trade transparency requirements in line with MiFID Article 27
• Reporting obligations in line with MiFID Article 25
• Possibility to extend transparency rules to cover other asset classes such as bonds and derivative instruments in future
• Future expansion phases according to MiFID Level 3

• Access to reliable data dissemination infrastructure without any internal expenses for the non-discriminatory dissemination to data vendors and the general public
• Outsourcing the expenses of reference data management (80 regulated markets in Europe, around 10,000 instruments)
• Development of a solution that complies with the MiFID using the know-how gained through long years of experience in the international real-time dissemination of market data and in the entire market data vending industry (Wiener Börse AG is a member of the MiFID Joint Working Group, internal and external experts, etc.)
• High data quality by using the well-proven content management of Wiener Börse AG, continuous quality control through redundant system design, failover procedures, data monitoring, error handling
• Maximum consolidation capacity of output data
• Reduction of the project and implementation costs and of the costs for OTC trade reporting by distributing the costs of development, production and operation among several market participants
• It is easier to calculate the costs of operation of the solution and to reduce cost pressure based on the overall implementation measures for the MiFID by the use of facilities with multi-client infrastructure by many market participants. This service allows banks to stay competitive in OTC trading.
• The central pooling of information clearly increases the quality of the capital market data (exchange data AND as many OTC prices as possible) and thus makes the true liquidity of securities transparent for the market and investors (and not only – as up to now – fragments of information or individual execution prices, etc.). The improvement of the quality of the information due to the additional data and consolidation helps to boost the tradability of stocks securities, especially of those with lower liquidity.