Kaushik Pramanik has 17 years of experience leading large regulatory projects for banks. He offers expertise in implementing MiFID II, the European regulatory framework that extends market transparency rules and other requirements to new asset classes and derivatives. MiFID II will significantly impact trading activities, pre-and post-trade reporting, and many divisions of affected firms. It must be implemented through a large global program with regional workstreams to ensure compliance by the January 3, 2017 deadline.

1. Leading, Managing and Directing MiFID II Program
in Banking & Financial Institutions
About the Author:
Kaushik Pramanik is a seasoned, capable,
effective, result-driven banking and finance
professional who boasts an exemplary track record
of leading and managing transformational change
and regulatory multi-million USD projects to large
high profile organisations like Citigroup, Credit
Suisse, UBS, SIX, PMI etc., utilising over
seventeen years of business and IT experience to
do so effectively and efficiently. Experienced in the
development and execution of solutions on both a
global and regional level, encompassing critical
analysis, strategic development, and process re-
design in order to achieve tangible business benefits
which add value and maximise profitability.
Offers a comprehensive end-to-end understanding
of the change processes, all relevant methodologies
and displays advanced skills in problem solving,
stakeholder management, decision making and
communication to formulate a shared business
vision which fulfils organisational overall
objectives.
What is MiFID II?
The Markets in Financial Instruments Directive
II (MiFID II) is the framework of European Union
(EU) legislation, an extended version of the original
MiFID I, focusing on trading activities like OTC
Derivatives trading, Commodity Derivatives
trading, Vanilla Asset Class trading or any other
trading or investment related activities etc.
Unlike MiFID I, which was focused to cash equity
and bond related asset classes, the scope of the
MiFID II directive has been extended to all sort of
asset classes, derivatives and structured products
with more robust pre-post-reporting requirements
and controls.
Investment intermediaries (Investment Bank,
Asset Management, Wealth Management,
Investment Management, Private Bank, Brokers
and Hedge Fund) providing services to clients in
relation to equity shares, bonds, funds, fixed
income, commodities, structured products and
derivatives instruments through various investment
schemes will be impacted by MiFID II.
What are the key features of MiFID II?
the organised trading of various financial
instruments by any approved financial firms
through Organized Trading Facility (OTF),
Multilateral Trading Facility (MTF) or a
Systematic Internalise (SI).
OTC Derivatives trades must be centrally
cleared via CCPs (Example: LCH London) and
must follow EMIR (European Market
Infrastructure Regulations) guidelines and risk
management procedures.

2. Algorithmic Trading (AT) strategies, High
Frequency Trading (HFT) strategies have to be
disclosed quarterly and must post quotes
throughout the trading day.
Extension of MiFID I to new asset classes,
OTC Derivatives and structured products.
Pre-and-post-trade transparency reporting will
be extended to large number of trading
activities.
More robust process and guidance to protect
investors from highly complex derivatives
transactions, new regulation for third country
firms who will interact with EU wide firms.
Which features of MiFID I will be extended to
new asset classes as part of MiFID II?
Following existing features of MiFID I will be
extended to new asset class and derivatives trading as
part of MiFID II. MiFID II implementation is much
bigger than MiFID I implementation and will impact
through the firm heavily.
Conduct of business: Client classification,
Suitability/Appropriateness, Rules governing best
execution, Inducements, Investment advice,
Reporting requirements, Client order handling,
Marketing, Transaction reporting.
Organisation: Rules regarding licensing, Cross-
border passport, Compliance arrangements, Risk
management, Outsourcing, Record keeping,
Client assets and Client money, Conflicts of
interest, Systems and Controls, Auditors,
Controllers and Governance.
Market Transparency: Rules regarding
Systemic Internalisation, Pre-trade transparency
and Post-trade transparency.
Which division of the bank or financial services
will be impacted by MiFID II?
Front Office, Middle Office, Back Office, Risk
Management, Operations, Finance, and IT area of the
bank will be impacted by MiFID II. There will be
high-impact on firms’ business processes, IT platform,
organization structure, business operating model
because of MiFID II.
What is trading venue ?
Under the new legislation, any “multilateral
system” – defined as a system or facility in which
multiple third-party buying and selling trading
interests in financial instruments are able to interact
in the system – must now operate as one of three
types of “trading venues”.
They are RM (Regulated Market), MTF
(Multilateral Trading Facility), and OTF
(Organized Trading Facility). Each category of
trading venue will have the same transparency
requirements, calibrated for MiFID II.
All trading venues are also subject to new
requirements for systems resilience, circuit
breakers, electronic trading and tick size regimes,
which are intended to address risks posed from
algorithmic trading and direct electronic access.
RM, a “regulated market” is defined as a
multilateral system operated by and/or managed by
a market operator, which brings together or
facilitates the bringing together of multiple third-
party buying and selling interests in financial
instruments – in the system and in accordance with
its non-discretionary rules – in a way that results in
a contract, in respect of the financial instruments
admitted to trading under its rules and/or systems,
and which is authorised and functions regularly and
in accordance with the provisions of Title III of
MiFID II.
In addition to the new transparency and other
requirements described above, RMs will be subject
to enhanced governance requirements similar to
those that have been introduced for investment
firms, including numerical limits on directorships,
diversity obligations, and mandatory nomination
committees.
A “multilateral trading facility” or “MTF” means
a multilateral system, operated by an investment
firm or a market operator, which brings together
multiple third-party buying and selling interests in
financial instruments – in the system and in
accordance with non-discretionary rules – in a way
that results in a contract in accordance with the
provisions of Title II of MiFID II.
The requirements for MTFs have been aligned with
those of RMs so that investment firms and market
operators operating an MTF will be required to
have (a) systems and measures in place to manage,
identify and mitigate risks, (b) effective
arrangements for the efficient and timely
finalisation of transactions executed under its
systems and (c) sufficient financial resources for its
orderly functioning.
An “organised trading facility” or “OTF” means
a multilateral system which is not an RM or an
MTF and in which multiple third-party buying and
selling interests in bonds, structured finance
products, emission allowances or derivatives are
able to interact in the system in a way that results in
a contract in accordance with the provisions of Title
II of MiFID II. Unlike RMs and MTFs, operators
of OTFs will have discretion as to how to execute
orders, subject to pre-transparency and best
execution obligations.

3. What are the impact areas of MiFID II in the
context of Trade Life Cycle?
MiFID II will impact following areas of the Trade
Life Cycle across all asset classes and derivatives
products.
Trading client on-boarding, Trading Strategy, Trade
Initiation, Trade Capture, Trade Execution, Trade
Reconciliation, Trade P &L and Accounting, Trade
Risk Management, Settlements and Clearing,
Ongoing Maintenance.
How firm must approach to implement MiFID
II requirements?
The bank or investment firm must start central
global MiFID II program spanning across regions,
and divisions covering all asset classes and any sort
of trading & investment activities. A central
Program Management Office is mandatory to
implement the requirement globally. A portfolio of
project and program need to be initiated globally,
which must be strategically aligned to overall
MiFID II objectives.
The program must create number of work streams
as per business operating model in each division to
implement MiFID II requirements. Each division
will be controlled by divisional Program Manager
to implement the requirement in each regions of the
division. The overall Program Operating Model
must be aligned to Business Operating Model.
Number of projects will be initiated across various
departments, and will be controlled and delivered
by individual Project Manager.
The program needs decisive leadership,
collaboration, governance, steering committee,
stakeholder management and cross-functional
leadership to implement the solution globally
because of its complexity. The strong support is
needed from CEO, CFO, COO, and CIO of the firm
because of its scale and large budget. Big 4
consultancy firms need to be engaged for auditing,
advisory and consultation purpose.
What is the timeline of MiFID II?
MiFID II requirements are due to be implemented
by 3rd January 2017. Because of it’s scale, big
impact and broad requirements, the initiation has to
be start now itself. All financial firms must start
various gap analysis to measure the impact and
draw the road map.
For further information, please contact
kaushik_pramanik@yahoo.com, Phone: 0041-
767174293