London Metal Exchange upgrades LMEselect to be MiFID II compliant, add dynamic price limits, enhance pre-trade risk management, and fix existing bugs.
This is just the first in a series of planned upgrades by European exchanges in 2017 as they prepare their platforms to comply with new regulations and launch new products. We will continue to provide relevant exchange updates as they surface.
LME has upgraded their platform primarily to add transparency around order origination. This has resulted in several new fields for orders as mandated by MiFID II, and specifically Regulatory Technical Standard (RTS) 24. The LME is also adding dynamic price limits that can be set for a specific contract based on the underlying reference price. And it is enhancing pre-trade risk management functionality to enable more specificity in setting house and client limits.
Anyone who trades LME will need to comply with the updates and start using the required fields by the January 2018 MiFID II deadline.
Object Trading is already conformed to LMEselect 9, and supporting client testing. This is a trading platform upgrade, so clients need to test their systems against the changes. LME Member Test access began in December 2016 and now continues into mid-March 2017. Go-live, previously expected in February, is now scheduled for the 27th of March.
Why is this important?
MiFID II is requiring all orders to be tagged with new information to improve market transparency. However inconsistency between the various approaches of different exchanges makes achieving this task in practice much harder.
As we all know, “FIX is more a suggestion, and less a standard”. That spirit applies to both the FIX interfaces and the exchanges’ proprietary APIs.
Every exchange needs to handle the RTS 24 requirements within the frameworks of their internal systems. Consequently, they are taking vastly different approaches to how they ask participants to provide the data required by MiFID II.
What’s Object Trading doing about it?
Object Trading is working closely with each exchange as and when they define their new interfaces. As we do this, we are including all required RTS 24 fields in our normalised interface. This enables our clients to use the tags consistently for all exchanges.
That means you only have to write to our updated API once, and you’ll be ready for all of the exchanges’ MiFID II updates.
We will be conforming to the exchanges as each announces their updated specifications. But once you’re conformed to our updated API, you won’t need to make any other changes to your interfaces in order to remain in compliance.
Once a firm is on our DMA Platform, they can also access 60+ other exchanges from the same normalised interface.
What do I need to do about it?
If you’re building in-house interfaces to these exchanges, then your IT team needs to stay on top of all the changes. The exchanges’ revised specification announcements are trickling out, demanding constant focus to stay up to date.
If you’re not already using Object Trading’s DMA Platform, it’s time to consider a switch. These exchange updates are going continue across the EU all year. Using the DMA platform will dramatically reduce the work effort required by your IT team to conform to all the updates and comply with new regulations going into effect at the start of 2018.
You can find more information about the LMEselect upgrade and all the updated specifications here.
What else do I need to know?
The exchange landscape is constantly shifting with a steady stream of upgrades, migrations, and product launches. Click here to access a graphical timeline and descriptions of planned updates for 2017.
What’s coming up?
LMEprecious is a new initiative created by the London Metal Exchange, the World Gold Council, and a group of leading industry players to introduce a new suite of exchange-traded precious metals products. Expected to go live on 5 June, subject to regulatory approval, it will provide new opportunities for trading, price discovery, risk management and an enhanced market structure.
In October 2016, LME moved their primary hosting site to Interxion’s LON-1 data center. Several of our latency-sensitive clients have already migrated to the new data centre, with more expected to follow. Contact us if you’d like to discuss moving your systems closer to the LME matching engines.
Some of our other recent updates include:
HKEX Derivatives Market (Hong Kong Futures Exchange) rolled out the new volatility control mechanism on the 16th of January. Object Trading passed verification testing back in July of 2016.
Eurex is in the process of upgrading their entire exchange architecture to improve trading, clearing and connectivity. This is a transformative change, and we’ve been keeping up with all the updates. Most recently, we were ready when they rolled out T7 v4.0 on the 21st of November, 2016.
We announced a partnership and integration with uTrade, allowing uTrade clients get access to 60+ markets connected to the Object Trading DMA Platform.
As the natural trading venue lifecycle plays out globally – with launches, constant product developments, and occasional closures, our customers need only write to our API once, and we do the rest. Object Trading continues to handle the relentless exchange changes, so the sell side, buy side and technology providers can focus on trading.
As we obtain the latest information about upcoming upgrades, we’ll publish them here on our blog. Subscribe below if you’d like to be notified of the exchange updates via email.
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