|Business clocks synchronisation|
|European Union Electricity Market Glossary|
Among major MiFID II innovations is the requirement put on all trading venues to synchronise the business clocks they use to record the date and time of any reportable event.
The respective legal basis is Article 50 of MiFID, which imposes the obligation of trading venues and their members and participants to record the date and time of any reportable event using an accurate time source (details of this new framework have been further stipulated in the Commission Delegated Regulation (EU) 2017/574 of 7 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the level of accuracy of business clocks).
The essence of new provisions on clock synchronisation is accurate and reliable time-stamping i.e. recording of date and time when execution, pre- or post-trade publication, etc., occurs, for the purpose of establishing evidence that data existed at a particular time.
According to the Annex to the said Regulation trading firms’ and venues’ business clocks must be synchronised with Coordinated Universal Time (UTC), allowing the maximum divergence from UTC to be either one millisecond or 100 microseconds.
Table 1: Level of business clock accuracy for operators of trading venues
Table 2: Level of business clock accuracy for members or participants of a trading venue
The new requirements are perceived as complex and costly, 100% synchronisation at all times is said to be at this point in time “technically impossible” within reasonable resources (see: MiFID II's algo plans come under fire).
In the face of increasing speed and volume of financial transactions, among those particularly affected may be High Frequency Trading (HFT) firms.
Commission Delegated Regulation (EU) 2017/574 of 7 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the level of accuracy of business clocks, OJ L 87, 31.3.2017, p. 148–151
|Last Updated on Wednesday, 24 May 2017 23:15|