An update to the 2007 Markets in Financial Instruments Directive, MiFID II applies to financial industry players providing investment services, such as investment banks, portfolio managers and brokers. In tandem with MiFIR, a regulation on the same issue, the new directive seeks to increase market stability and confidence, and bolster consumer protections.

Bloomberg’s Solution
Bloomberg is continuously working with regulators and market participants to determine the impact of MiFID II and MiFIR on the execution of derivatives trades. Bloomberg provides entity and customer classifications data as part of its Reference Data Services as well as independent, third-party valuation of derivatives instruments through BVAL Derivatives. Execution platforms that fully comply with the MIFID II/MiFIR requirements are under development. The Bloomberg transaction reporting service is available as part of the Bloomberg’s Trade Order Management Solutions (TOMS), our sell-side trading solution for fixed income and derivative transactions.

The Fundamental Review of the Trading Book (FRTB) is the biggest global sell-side regulatory change in more than two decades, completely overhauling the framework for market risk. The pressure is on for hundreds of banks to decide on an FRTB solution in 2017 in order to gain regulatory approval before the 2019 deadline.

Bloomberg’s Solution
A comprehensive suite of solutions enables you to meet all aspects of the FRTB requirements, ranging from calculation engines to “real price” data repositories. Whether you require FRTB-ready data, a reliable risk analytics engine, or a full end-to-end workflow, Bloomberg can customize a package to meet your needs. New capabilities include regulatory capital calculations for both standardized and internal model approaches, as well as risk factor mapping and modellable risk factor determination—all powered by Bloomberg pricing and market data.

Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision (BCBS) to promote stability in the international financial system by strengthening regulation, supervision and risk management in the banking sector. Compliance with new Basel III standards began Jan 2013 and will be progressively phased in through 2019. New requirements cover regulatory capital and liquidity ratios.

Bloomberg’s Solution
Bloomberg provides firms with a comprehensive set of tools, data and analytics for calculating and managing the capital and liquidity adequacy requirements mandated by Basel III, covering HQLA (High Quality Liquid Assets), LQA (Liquidity Assessment), Central Bank Eligibility, and SSFA (Simplified Supervisory Formula Approach) requirements.

The Basel Committee on Banking Supervision’s regulation number 239 (BSBS 239) is titled Principles For Effective Risk Data Aggregation and Risk Reporting. Published in January 2013, BCBS 239 is aimed at strengthening banks’ risk data aggregation capabilities and internal risk reporting practices, with the ultimate goal of enhancing the risk management and decision-making processes at banks.

Bloomberg’s Solution
Bloomberg’s risk solutions are powered by Bloomberg’s market-leading data and analytics. The automation, scalability and data sharing offered by the Bloomberg platform can help significantly reduce the costs of BCBS 239 compliance. For clients of both TOMS and MARS, positions are acquired from the same database for both front office and risk analysis, easing the burden of reconciliation and helping meet the requirements of Principle 3 of the regulations, on accuracy and integrity of data). Market data is guaranteed to be the same between front office and risk management, and the same pricing libraries are used for both front office and risk analytics, ensuring consistency (helping satisfy Principles 4 and 5, consistency and timeliness). In line with Principle 6 (adaptability), stress tests can easily be configured and added to risk reports, while the same stress tests can also be shared with traders for day-to-day position management.

Dodd-Frank mandates new requirements that cover three key areas of an institution’s workflow: execution, clearing and reporting. Under the rules the execution and trading of swaps must take place within an approved Swap Execution Facility (SEF).

Bloomberg’s Solution
Bloomberg provides a range of solutions to help firms meet the execution, clearing and reporting requirements under Dodd-Frank. Bloomberg SEF is the market’s leading Swap Execution Facility, with support for Credit Default Swaps (CDS), Interest Rate Swaps (IRS), Foreign Exchanges (FX) and Commodity Derivatives. Bloomberg SEF provides an Order Book that enables participants to post both firm and indicative bids and offers that are transparent to all other participants, and to initiate a request for quote (RFQ) to a mandatory minimum of two other participants. Bloomberg also supports the clearing workflow process as mandated by Dodd-Frank, and helps facilitate the generation and transmission of Unique Swap Identifiers (USIs) for reporting purposes.

In September 2013, the Basel Committee on Banking Supervision (BCBS), together with the Bank of International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), created a framework establishing global requirements for margining of non-cleared over-the-counter (OTC) derivatives. The framework is designed to reduce systemic risks related to OTC derivatives markets and to provide firms with appropriate incentives for central clearing. The new minimum standards, which took effect in many jurisdictions globally—including the U.S. and Europe— from September 2016, obliged covered firms that engage in non-centrally cleared derivatives to exchange initial margin and variation margin. The regulation goes as far as defining the types of eligible collateral and their respective haircuts for margining. These requirements impact various financial institutions and require front-to-back infrastructure changes.

Bloomberg’s Solution
Bloomberg’s MARS Collateral Management is an end-to-end collateral management and processing hub that provides a straight-through, automated solution to holistically manage and monitor exposures and collateral positions. It is a multi-product, multi-asset collateral and margin management application that delivers a complete range of functionality. Additionally, our Collateral Tagging solution provides customers with an efficient mechanism to determine, classify and comply with the collateral eligibility requirements of the non-centrally cleared OTC derivatives margin rule across various global regimes.

On October 13, 2016, the U.S. Securities and Exchange Commission (SEC) adopted final rules designed to promote effective liquidity risk management for open-end management investment companies (“funds”). Rule 22e-4 creates a regulatory framework that seeks to promote effective liquidity risk management for mutual funds and ETFs, and enhance disclosures of fund liquidity and redemption practices. The compliance date of rule 22e-4 is December 1, 2018 for funds larger than $1 billion resp., and June 1, 2019 for small funds. Disclosures of Form N-Port is required earlier (June 2018 for large funds) and may include liquidity classification.

Bloomberg’s Solution
Bloomberg’s solution for SEC 22e-4 offers best-practice liquidity analytics and an enterprise delivery environment that enables clients to consistently manage and report liquidity risk across multi-asset class portfolios. Our solution is built on Bloomberg’s award-winning approach for Liquidity Assessment (LQA), providing the ability to quantitatively evaluate market liquidity even for instruments with limited trading activity. LQA is designed to deliver on global regulatory requirements and adds value to risk management and investment processes.

In July 2014, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments, replacing IAS 39. The standard updates the model for balance sheet classification and measurement of financial instruments, impairment of financial securities, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

Bloomberg’s Solution
Bloomberg’s IFRS 9 SPPI Test solution assists clients in performing the contractual cash flows test required by the updated IFRS 9 classification and measurement model. The Bloomberg solution automates the process of reviewing individual security prospectuses and legal documents by scanning over 70 unique security attributes for each financial instrument and identifying potentially non-SPPI features or cash flows.

Intesa Sanpaolo Selects Bloomberg IFRS 9 SPPI Data to Streamline Adoption of New Accounting Standard. View the press announcement.

The European Market Infrastructure Regulation (EMIR) is a body of European legislation for the regulation of over-the-counter derivatives that covers clearing, margin and capital, and reporting. Under the new requirements, standardized derivative contracts must be cleared through central counterparties, those counterparties should have permanent, available and separate initial and variation margins in the form of highly liquid collateral, and all OTC derivative contracts should be reported to trade repositories.

Bloomberg’s Solution
In addition to providing entity classification data through our Reference Data Services and independent derivatives valuation through BVAL Derivatives, Bloomberg’s EMIR reporting solutions enable clients to seamlessly connect to trade repositories without the need for building or maintaining complex connectivity to multiple repositories. This is achieved through Bloomberg’s straight-through processing (STP) and collateral and valuation reporting solutions that allow you to seamlessly send valuations (Bloomberg’s or your own) to trade repositories using a single workflow and offer coverage across asset classes and product types, using high-quality data and multiple derivatives pricing models.

Included in the Dodd-Frank Act of 2010 at the behest of former Federal Reserve Chair Paul Volcker, almost all U.S. deposit taking institutions, their affiliates, and foreign banks with a significant U.S. presence will be impacted by the Volcker rule in some way. The regulation aims to reduce the short-term and long-term trading risk of deposit-taking institutions through requirements that prohibit banks from engaging in proprietary trading (with some exceptions for market-making, hedging and underwriting) and compel them to divest their ownership interest in ‘covered funds’ such as hedge funds, private equity funds, most collateralized loan obligations (CLOs), and some other types of securitizations.

Bloomberg’s Solution
Our Enterprise-level solution helps banks identify covered funds quickly and efficiently with minimal manual effort, automatically extracting pertinent details from securitization and CLO deal documents to identify covered funds and provide details about ownership structure, deal type, tranche and collateral, and flagging the need for further legal review when a clear determination cannot be made. Bloomberg’s solution enables banks to focus resources on the most complex evaluations, track sponsorship of covered funds, and calculate Tier 1 capital limits associated with ownership interests. Its also allows buy-side institutions to identify market liquidity and price discrepancies, and drive demand for non-covered funds.

A fundamental review of the capital adequacy regime for the European insurance industry, Solvency II standardizes reporting and valuation of assets and liabilities and implements minimum capital requirements for insurers that take market risk and liability management into consideration. The regulation aims to increase protection for policyholders by mandating capital requirements, imposing higher standards of risk management and governance, and increasing disclosure, reporting and transparency.

Bloomberg’s Solution
Bloomberg provides high-quality reference and pricing data to help firms meet key Solvency II requirements. The Solvency II data package provides the mandatory Complimentary Identification Codes (CIC) and European Statistical Classifications of Economic Activities (NACE) codes required in Solvency II’s Quantitative Reporting Templates (QRT), and also includes the Legal Entity Identifier (LEI), ultimate parent, security IDs, duration, ratings and security types. In addition, BVAL, the Bloomberg Valuation Service, delivers transparent, defensible prices for fixed income and derivative securities.

Unlike in Europe or the U.S., the diverse economies and jurisdictions of Asia Pacific do not adhere to a single regulatory approach. While select global regulation, such as Basel III, is being widely implemented, the regional trend is toward greater diffusion and fragmentation—and thus greater localization in APAC regulation.

Bloomberg’s Solution
Bloomberg’s APAC Regulation (AREG) provides information about the regulations governing Asia Pacific markets and the region’s evolving over-the-counter (OTC) derivative and capital markets. AREG addresses four key touch-points that drive the still-fluid and fragmented nature of regulatory development across the region: risk management, due diligence, regulatory reporting and trade compliance.