Just over a year on, it turns out that many firms are still struggling with various aspects of MiFID II leaving them vulnerable to sanctions as regulatory patience is wearing thin. This Global Risk Regulator article explains more.
Check out the full article here.
Excerpt
One area of development is around simulation where a firm can safely test a new algorithm without letting it loose in the markets. Typically, firms have been doing such tests using historical data reflecting certain market conditions, but the problem is that these do not not respond interactively with the trading scenario being played out
“You need a simulator that can mimic financial markets so you can test it. You don’t want to test it in the real world and contribute to a disorderly market. You want to be able to simulate markets in the way they behave in the real world,” says Justin Lyon, CEO at enterprise simulation company, Simudyne. Mr Lyon is a former consultant to the US Department of Defense and later to the Bank of England.
He explains that Simudyne’s solution allows banks to develop algorithms and strategies that will not expose what they are doing in the market and can therefore get better prices for their clients.
“Banks are using our software to replace the old style simulators so they can get more realistic simulations,” says Mr Lyon.
