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Rules and Regulations

Fixed Income

Several changes will be implemented in Fixed Income in order to meet the requirements of MiFID II, including in the areas of pre- and post-trade transparency, deferral of publication, trade cancellation and reference data.

MiFID II and MiFIR introduce several requirements to Regulated Markets (RMs), other trading facilities and Investment Firms (IFs) trading fixed income products. 

Nasdaq offers trading and clearing facilities in fixed income products via the trading and clearing application Genium INET. Nasdaq plans to develop this application to be fully MiFID II compliant. This involves some changes and enhancements to the current Genium INET application, which will be described briefly in the below outline of expected effects of MiFID II requirements. 


Requirements on Pre-Trade Transparency

RMs and IFs are obliged to publish current bid and offer prices on a continuous basis during normal opening hours. The required pre-trade information depends on the type of trading system. 

Most Nasdaq Nordic fixed income markets use continuous match and already publish all individual orders and aggregated order book information on the five best prices inclusive of the accumulated volume. Nasdaq will continue offering this pre-trade information, although it will add the number of orders for each price level to the aggregated order book information. 

Waivers From Pre-Trade Transparency 

Currently, Nasdaq offers IFs to use reserve orders (aka "Iceberg Orders"), i.e. IFs may hide part of their large orders to avoid negative impacts on market prices. Nasdaq will continue to offer reserve order functionality; but also intends to develop a facility for IFs to hide orders that are large in scale compared to normal market size. A new feature will be added to the reserve order, as MiFID II requires reserve orders to have a minimum total amount of 10,000 EUR. 

Pre-Trade Validations 

Nasdaq will introduce pre-trade controls and circuit breakers for all continuous match markets. 

The exact implementation of the price and volume validations and circuit breakers might differ from asset class to asset class in order to accommodate for differences in trading policies and characteristics. 

Nasdaq will also implement a volume validation on reserve orders, confer the above mentioned minimum volume requirement of 10,000 EUR.

Systematic Internalisers 

Systematic Internalisers (SI) are obliged to publish quotes they offer to clients in certain cases. This is the case for quotes in liquid instruments up to the SSTI threshold. SIs can publish these quotes in different ways; one of them is via a Regulated Market.

Nasdaq will introduce a new order type to be used by SIs to publish quotes. The orders will be visible and public but will not be executable in the trading system. That way SIs will be able to comply with their obligations.


Requirements on Post-Trade Transparency

MiFID II introduces very specific requirements regarding post-trade information and when to publish the information for non-equity instruments. 

This implies significant changes to the current post-trade information available in Genium INET and GCF. The trade ticker will be changed to include a few new data fields and new flags. 

Deferral of Publication 

Currently publication of trades large in scale may be deferred until End-of-Day (EoD) at the latest. 

MiFID II specifies that the National Competent Authorities (NCAs) may authorize a deferral of the publication until 19:00 on day T+2. This goes for trades large in scale or for trades in illiquid instruments. 

NCAs have even the possibility to authorize a deferral of up to four weeks. 

MiFID II then introduces a very complex regime of deferrals – as the individual NCAs may implement different deferral models in their home markets. 

Nasdaq plans to implement the Nordic deferral models (i.e. deferral models authorized by the Nordic NCAs) and to be able to administer deferrals on all Nordic listed instruments.

Trade Cancellations and Amendments

Currently Genium INET only handles cancellations and amendments intraday, i.e. cancellations must be completed before closing of the markets. 

Nasdaq plans to add the option of cancellation and amendments of “historic” trades – however only for trades not yet settled, i.e. cancellation must take place before the specified settlement date. 

The cancellation message will also be changed. MiFID II requires that all original trade information shall be included in the cancellation message and that a cancellation-flag be added. 

Amendments require a cancellation message and a new trade message that includes of all the original information, the amended information, and an amendment-flag. 

Changes in Reference Data 

In order for Nasdaq to comply with the above mentioned pre- and post-trade transparency requirements, some new reference data needs to be registered and some existing reference data may need a change in format. 

Nasdaq intends to incorporate all relevant new reference data in the appropriate messages and in the Genium Consolidated Feed (GCF). 



Members can reach out to their Key Account Managers directly and or contact the MiFID II implementation project via fixedincome.MiFID2@nasdaq.com

Updates will be published on this site and will contain news on service offerings and MiFID II/MiFIR implementation details as they become available.


CountryKey Account Managers
Baltic

Vaidotas Užpalis
Trading Operations Manager
+370 5 253 1454

Denmark

Kasper Byrfelt Lund
Sales Director
+45 33 77 03 52

Nicolai Wallin Pedersen
Associate Vice President
+45 33 77 03 60

Poul Erik Egeberg
Senior Development Manager
+45 33 77 03 61

Finland

Fredrik von Platen
Manager Listing Services
+46 8 405 6439

Iceland

Finnbogi Rafn Jonsson
Fixed Income/Fixed Income indexes
+ 354 525 2852

Sweden

Ann-Charlotte Eliasson
VP Fixed Income Sales
+46 8 405 6892

Fredrik von Platen
Manager Listing Services
+46 8 405 6439

Angelica Nordberg
Senior Development Manager
+46 8 405 6633

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From Börsforum in Stockholm

Discussion on MiFID II and Fixed Income from Börsforum - seminar in English and Swedish

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