MiFID II and Real-Time Technology Fortify Electronic Trading in OTC Markets

The colossal piece of legislation known as MiFID II and the role of innovative technology are two pivotal factors that are having a significant impact on OTC derivatives trading and market structure. MiFID II came into force on January 3, 2018 and represents a vast regulatory change that impacts trade requirements and has become a catalyst for change. An immediate result of this legislation is that it has kindled a surge in electronic trading as investors strive to meet the new requirements.

This opens an opportunity for market makers in that now there is an enlarged appetite for electronic trading from market takers. Market share will be there for the taking, but to succeed could mean using the type of advanced technologies that allow for faster access to information, faster decision-making, quicker insights and the ability to keep pace with, or outpace, competitors.

In this paper, we examine the role that MiFID and new technologies are playing in generating a measurable rise in electronic trading and the factors that impact market makers.