The new MiFID 2 regulations are not yet set in stone, but are approaching completion with what should be minor changes between now and June 2016. Although the regulations will not come into effect until January 2017, now is a good time to start updating relevant systems to ensure they are compliant with the prospective new rules. A potential further delay to January 2018 is still actively being discussed at the time of writing. Readers may want to refer to page 24 for additional insights into this.
There is one section of the latest revision of the RTS (Regulatory Technical Standards) that is entirely new:
"RTS 25: Draft regulatory technical standards on clock synchronization" - 2015-ESMA-1464
The previous revision of these regulations was codified in 2004 and lacked specificity with regards to timestamp synchronisation, divergence and granularity.
The latest proposed regulations seek to address this. In the table opposite, each type of trading activity is color-coded according to its requirements:
Red for requirements that allow timestamps with a resolution of at least 1 second (such as manual trading activities)
Yellow for activities that require 1 millisecond resolution
Green for applications that require microsecond resolution timestamps
The designations 'category 1, 2 and 3' are not mentioned in the directive text. It is something we have introduced here to easily identify the various levels of requirements.