MiFID II - What’s left to do?

Six Stages of MiFID II Implementation For each workstream … Denial Trying to avoid the inevitable Anger Frustrating outpouring of bottled-up emotion Bargaining Seeking in vain for a way out Depression Final realisation of the inevitable Testing Seeking realistic solutions Acceptance Finally finding the way forward

A Long Way to Go … and a Short Time to Get There Practical Challenges Regulatory Uncertainty Client Outreach Realistic Timelines & Triage

Regulatory Uncertainty No clarity from regulators on open issues At the point of having to take a position E.g., ‘Costs and Charges’ Multiple interpretations

Change of Behavior; Policy Client Outreach Progress Status – September 2017? Challenges: High volume of queries Challenges to classification Client response speed (for key information) Document Type Type of Communication One / Two way LEI requirement Notification; Policy One-way Terms of Business repapering Policy Client Classification refresh Change of Behavior; Policy Best Execution Summary Best Execution Consent Two-way Disclosure Consent Mandatory Clearing Obligation Research Unbundling Algorithmic Trading Assisted Reporting

Realistic Timelines … and Triage 2017 Triage book of work (by products and volumes) (80%) Post 3rd January 2018 Three Streams: MiFID II Implementation (20%) MiFID II BAU Other Regulatory Regimes (e.g., GDPR)

Real Time Requirements MiFID II technology considerations Data Consolidation Connectivity Rules Engines Output Modules Real Time Requirements Change is the constant Audit Alerts & Workflow

Kx Technology applied to MiFID II 4. VISUALISATION A rich visualisation layer then offers configurable HTML5 dashboards that provide powerful BI and reporting capabilities 3. BUSINESS LOGIC Sample Modules SI Determination TCA Best Execution MAR/Surveillance In the business logic layer applications can consume enterprise-certified data. The platform is designed to bolt on modular components of code written in response to regulatory demand. 2. THE PLATFORM This layer includes functionality to abstract the end user from the vagaries of data differences. Data filtering can be managed through simple configuration without downstream applications having to resort to code to implement the cleansing routines they need. API Access API Access 1. DATA MANAGEMENT The platform fuses data from multiple sources is ingested in real time or historical. Data is validated, normalized and stored. Market /Ref Data Orders & Executions e-Comm data, Manual Entry. Proprietary system feeds

Architecture Kx for DaaS Financial Market Solutions Scalability: [Horizontal/Vertical] . Redundancy: Hot-Hot. Use Case Separation & Sandboxing Native Lambda/HTAP Architecture Analyst for Kx Kx for DaaS Adhoc import, transform, query and explore without programming Core File & DB Sources Batch Loader Stream Engine Ticker Plant Realtime Engine In Memory Data Queries (Request / Reply) Streaming Event-triggered In Memory Database Financial Market Solutions Transaction Cost Analysis Dashboards for Kx Best Execution Reporting Real-Time Sources Stream Feed Handler Historical Database Build real-time visualizations for multiple devices Mifid II RTS Reports q language & scripting Third-Party Interoperability pub/sub, web services, change data capture,… R, Python, Matlab, Java, ODBC, web sockets… Kx for Surveillance API’s for Kx Native kdb API’s. Direct IPC and binary communication for HPC Kx for DaaS DaaS Admin Server Monitor for Kx Develop, configure, deploy and manage solutions: Authentication, subscription, connections, users, settings, permission, configuration. Scan, monitor and alerting of issues in software and hardware

3. BEST EXECUTION REPORTING Mifid II – On track? 1 .BEST EXECUTION POLICY 5. PRE/POST TRADE TRANSPARENCY 2 .BEST EXECUTION MONITORING MIFID 4. SI DETERMINATION 3. BEST EXECUTION REPORTING RTS 27/28

Best Execution – Key Actions BENCHMARKS DEFINE BEST EX POLICY MARKET DATA SOURCE FEEDHANDLERS ORDERS & EXECUTION DATA SOURCE OMS/EMS SYSTEMS PLATFORM SYSTEM UPGRADE/INSTALL/ADMIN DATA INTEGRATION ANALYSIS & REPORTING JAN 2018

Building Solutions Using Kx - Mifid II Reporting Solutions To Meet an Industry Demand! We have a full suite of RTS components Examples include Data Management Trade and Transaction reporting engines Order Book Reconstruction Transaction Cost Analysis Systematic Internaliser RTS 27 & RTS 28 Reports EBBO Position Limit Monitoring for Commodities

RTS 27 & 28 Reporting