MiFID II - Impact on FX & Corporates

Regulatory Update - Treasury Finance Forum Day 2017

Vincenzo Dimase

Head of Trading – Market Development, Continental Europe

MARKET CHALLENGES

2

REGULATORY PUSH THE IMPACT OF MIFID II

3

MIFID II &

MiFIR

Entire financial market players

(buy side & sell side) including

liquidity platforms, data vendors

and other service providers

WHO IS IMPACTED?

3rd January 2018

EFFECTIVE DATE

• Market Structure

• Research Unbundling

• Transparency

• Best Execution

• Investor Protection

• ...

MAJOR CHALLENGES

Aims to achieve more efficient,

resilient and transparent financial

markets to strengthen investor

protection, through shifting OTC

trading to organised multilateral

regulated trading platforms

PURPOSE

PURPOSE

MAJOR

CHALLENGES

WHO IS

IMPACTED?

EFFECTIVE

DATE

MiFID II MARKET STRUCTURE

4

Changing market structure for trading will present challenges for market participants, but also opportunities for new trading strategies

Multilateral Bilateral

Regulated Markets

(RMs)

Exchanges

Multilateral Trading

Facilities (MTFs)

FXall

Organised Trading

Facilities (OTFs)

Systematic Internalisers (SI)

Banks who deal on own

account when executing

client orders

Bilateral

trading

MTFs RMs OTFs SIs OTC

Listed e.g. futures Over the counter/ Non Listed

Trading Venues

MiFID II – MARKET STRUCTURE WHAT ACTION IS THOMSON REUTERS TAKING TO RESPOND?

5

Thomson Reuters has long experience as an operator of an FX MTF (TR Matching), and will upgrade existing platforms to

comply with MiFID II and help our customers

FX Trading Platforms

• We already operate an MTF via RTSL (MiFID I) on Foreign Exchange since 2007.

• Thomson Reuters will operate one MTF under MiFID II covering:

—TR Fxall (Quick Trade) & TR Forwards Matching

New reporting solutions for post-trade and transaction reporting (NFCs)

GUI upgraded to accommodate new data fields

New STP feeds to provide new data fields to trade parties for their own reporting and recordkeeping requirements

MiFID II – TRANSPARENCY POST TRADE

6

Pre Trade Post Trade

Trade

Reporting

Transaction

Reporting

“Real Time”, via APAs

FX Illiquid = 48h

T+1, via ARMs or

directly, Non Public

Public

NCAs National

Competent

Authorithies

MiFID II Transparency

No

Pre Trade

Transparency

FX Illiquid

MiFID II – TRANSPARENCY

7

THE FULL PICTURE

RM Regulated

Markets

MTF

Multilateral

Trading

Facility

OTF Organized

Trading

Facility

RM Regulated

Markets

MTF

Multilateral

Trading

Facility

OTF Organized

Trading

Facility

TRADING VENUE TRADING VENUE

SI Systematic

Internaliser

OTC

Pre Trade Post Trade – Trade Reporting

APA

Approved

Publication

Arrangement

SI Systematic

Internaliser

Public

• ESMA deemed illiquid all FX instruments = > No Pre Trade Transparency

MiFID II – TRANSPARENCY POST TRADE – TRADE REPORTING

8

RM Regulated

Markets

MTF

Multilateral

Trading

Facility

OTF Organized

Trading

Facility

TRADING VENUE

SI Systematic

Internaliser

OTC

Post Trade – Trade Reporting

APA TradeWeb

APA

Approved

Publication

Arrangement

Post Trade – Transaction Reporting

NCAs

National

Competent

Authorities

ARM

Approved

Reporting

Mechanism

65 fields to be reported to NCAs in XML

ISO20022 format

Public

Fxall MTF Members Onboarding

- No recontracting

- Collection of Static Data (LEI, Legal Name,

Traders, ...)

Thomson Reuters to complete Trade Reporting

MiFID II – TRANSPARENCY POST TRADE – TRANSACTION REPORTING

9

RM Regulated

Markets

MTF

Multilateral

Trading

Facility

OTF Organized

Trading

Facility

TRADING VENUE

SI Systematic

Internaliser

OTC

Post Trade – Trade Reporting

APA

Approved

Publication

Arrangement

Post Trade – Transaction Reporting

NCAs

National

Competent

Authorities

ARM

Approved

Reporting

Mechanism

65 fields to be reported to NCAs in XML

ISO20022 format

Public Thomson Reuters to complete Transaction Reporting

MiFID II – BEST EXECUTION THE NEW FRAMEWORK

10

Under MiFID I, firms were obliged to take “all reasonable steps” to achieve the best

possible results for their clients.

Under MiFID II, firms will instead be required to take “all sufficient steps to achieve the

best possible results for their clients”.

Best Execution Policy

Reporting to the public (RTS27 & RTS 28)

Monitoring Best Execution (TCA) analytics

Controlling activities

MiFID II – BEST EXECUTION FROM A CORPORATE POINT OF VIEW…

11

BestX...a Technology company providing Independent Trade Analytics that enable clients to:

- Define, Achieve and Demonstrate Best Execution

- Assess and Compare Quality of their FX execution

Focus on Foreign Exchange

Includes Spot

Independence

Superior Analytics

FX Relevant TCA

STP with FXT & FXall

Venue Agnostic

Leverages TR Market Data

THOMSON REUTERS ANSWER BENEFITS OF ACCESSING OUR MTF

12

• Thomson Reuters will operate an MTF: FXall Quick Trade

− Corporates can access FXAll

− Membership to the MTF will be subject to Onboarding Process (no re-contracting)

• Our MTF will take care of Post Trade obligations

− Trade Reporting

− Transaction Reporting ( for Non Authorized Firms)

• Access to Liquid & Robust platform

− Highly regulated and robust platform

− Operational Efficiencies via STP & Post Trade Feeds

• Best Execution Tools & Analytics

− Indipendent & Dedicated to FX

THOMSON REUTERS ANSWERS www.mifidii.com

13

Dedicated Website – www.mifidii.com

Twitter: TR MiFID II Insights

Webinars

- MiFID II: Data for transaction reporting

- MiFID II: Data for best execution

- MiFID II:MiFID II: Is the market truly ready? Will compliance be achieved?

SUPPLY CHAIN RISK & THE CHANGING ROLE OF CORPORATE TREASURY AITI - TREASURY FINANCE FORUM DAY 2017

Alessandro Sanos, CAIA

Market Development Manager, Commodities & Supply Chain

21st September 2017

@AlessandroSanos #TRFinRisk

#TRFinRisk

JOIN THE CONVERSATION

Landmarks on the landscape

Supply Chain Risk and the

changing role of Corporate

Treasury

Our answer

LANDMARKS ON THE LANDSCAPE

Unpredicted economic and geopolitical environment

Increased regulation and higher fines for non-compliance

Compressed margins

Digital transformation

#TRFinRisk

SUPPLY CHAIN RISK GOING GLOBAL: DRIVING FACTORS BEHIND INTERNATIONAL EXPANSION

18 Source: “Going Global” report, Thomson Reuters

#TRFinRisk

19 Source: MIT Observatory of Economic Complexity

ORIGINS DESTINATIONS

SUPPLY CHAIN RISK IMPORTS & EXPORTS OF ITALY

#TRFinRisk

SUPPLY CHAIN RISK THE TOP 5 RISKS TO AN ORGANIZATION’S SUPPLY CHAIN

Source: Thomson Reuters Supply Chain Customer Needs Survey

#TRFinRisk

SUPPLY CHAIN RISK THE IMPACT OF INCIDENTS/DISRUPTIONS IN THE LAST 12 MONTHS?

21 Source: Thomson Reuters Supply Chain Customer Needs Survey

#TRFinRisk

Disruptive supply chain

incidents typically cost

companies over $1M

~20% of companies

reported incidents costing

$50M+ in the past year

Global cost of Supply Chain

Disruptions estimated at

~$200B annually

SUPPLY CHAIN RISK MOST CHALLENGING TASK

22

(% of respondents who scored 5 or higher)

Source: Thomson Reuters Supply Chain Customer Needs Survey

#TRFinRisk

23

SUPPLY CHAIN RISK HOW CHALLENGING ARE EACH OF THE FOLLOWING TASKS OR TOPICS IN YOUR WORK?

(Percentage of respondents who rated challenge at 5 or higher out of 7)

Source: Thomson Reuters Supply Chain Customer Needs Survey

#TRFinRisk

SINGLE MOST IMPORTANT DISRUPTIONS ARE COSTING COMPANIES BETWEEN $1M TO $50M PER INCIDENT

PRICE RISK

EXPOSURE TO FLUCTUATING

MATERIALS COSTS

SUPPLY RISK

EXPOSURE TO DISRUPTIVE EVENTS

SUPPLIER RISK

EXPOSURE TO DIVERSE

COUNTERPARTIES

24

SUPPLY CHAIN RISK

#TRFinRisk

PRICE RISK

Ineffective price risk management can seriously affect costs,

profitability and company performance. Organizations need to:

• Understand the drivers around commodities price volatility,

• Access the most liquid, efficient and transparent foreign

exchange venue possible

• Access accurate predictions of future price movements

• etc

“WHAT IS MY MARKET EXPOSURE?”

#TRFinRisk

Thomson Reuters Eikon – ICE Coffee Volatility Surface 30th Aug 2018

SUPPLY RISK

“WHAT IS THE IMPACT OF DISRUPTIVE EVENTS ON MY

SUPPLY CHAIN?”

Thomson Reuters Eikon – Tropical Strom Harvey 28th Aug 2018

#TRFinRisk

To quickly uncover disruptions in supply webs, organizations

need to:

• Access comprehensive weather forecasts to act on extreme

weather

• Respond to production interruptions and supply outages

• Track vessels in real-time and react to transportation

difficulties

• etc

The more suppliers and third parties a corporation has, the

more likely it is that, among other things, one of them is:

• Engaged in modern day slavery or human trafficking

• Exposed to sanctioned countries or entities

• Corrupt or engaged in bribery

• etc

SUPPLIER RISK

“DO I REALLY KNOW WHO I AM DOING BUSINESS WITH?”

#TRFinRisk

Thomson Reuters World Check

WHAT IS THOMSON REUTERS ANSWER TO THE SUPPLY CHAIN CHALLENGE?

THOMSON REUTERS’ ANSWER TO SUPPLY CHAIN RISK

THOMSON REUTERS BRINGS TOGETHER A UNIQUE SET OF TOOLS AND CAPABILITIES TO

CONFIDENTLY AND EFFECTIVELY MANAGE YOUR SUPPLY CHAIN.

Our solutions can help you:

• stay informed on the latest developments in your market

• manage commodities price risk

• visualize and analyse supply disruption risks

• check for reputational risk

• mitigate currency risk and spot FX opportunities

• manage logistics and freight risks

• be confident in your choice of supplier

#TRFinRisk

CLOSING REMARKS

“BY VIEWING THE SUPPLY CHAIN

THROUGH A FINANCIAL LENS …

TREASURY MANAGERS

CAN HAVE A REAL IMPACT

ON MAKING THEIR FIRM

MORE COMPETITIVE”.

JPMorgan, Treasury and the Supply Chain report

30 #TRFinRisk

31 REUTERS/David W Cerny

GRAZIE