Six major global banks have adopted the first fully-digitized MiFID II trade compliance engine for the financial markets. The ground-breaking service from Droit Financial Technologies ("Droit") was launched in January ahead of the MiFID II deadline, and instantly expands the ability of financial institutions to comply with the thousands of pages of MiFID II regulations. Goldman Sachs Asset Management has also gone live as the first buy-side client.
The new platform, whose clients include BNP Paribas, CACIB, Goldman Sachs (including both its broker/dealer and GSAM entities), and UBS, is an extension of Droit's award-winning ADEPT (the Operating System for Regulation). It provides the current and complete digitized machine-readable MiFID II rule text and machine-executable implementation, enabling complete verification and auditability of every trading decision, including traceability to the letter of the law.
"Droit's ADEPT product is a central part of our eligibility architecture for MiFID II for both our broker/dealer and GSAM businesses, across a range of obligations. Droit's innovative approach to the digitisation of regulation and eligibility, and the evolution of their ADEPT product fits well with our overall strategy," said Jo Hannaford, Managing Director, Technology Division, Goldman Sachs.
"Droit has successfully implemented an innovative and exciting platform which helps us strategically respond to industry and regulatory changes, like MiFID II, in the interest of better serving our clients. It is a core part of our digital strategy to work with leading providers like Droit to complement our in-house expertise to stay at the cutting edge of digital global markets," said Cyril Cottu, Global Head of eCommerce and Digital, BNP Paribas Global Markets.
"The speed and ease with which we can implement new regulatory rule sets coupled with the flexibility of the core product integration means Droit is well placed to be the strategic regulatory eligibility platform for the Investment bank," said Simon Herbert, MiFID II Programme Lead at UBS Investment Bank.
"Digitization is much more than an exercise in tagging data; it's the complete analytic structuring of one of the financial markets' largest ever pieces of legislation. Droit provides the full stack, starting with digitising the actual legal texts into an open, standard, machine-readable format through to standard executable implementations within real-time systems," said Satya Pemmaraju, CEO of Droit. "As regulations live and breathe, so our clients' implementations and legal sources evolve in synchronicity."
Transactional compliance requires the knowledge, maintenance and automation of highly complex global rule systems. Droit's Adept platform responds to this need by generating the full global cross-regulatory implications and obligations of a trade in real-time along with unprecedented per-enquiry audit capabilities.
The corpus of digitized machine-readable legislation is represented using the open Akoma Ntoso* XML standard that is now used by numerous regulatory and legislative bodies. The machine-executable implementation is called from with trading and operational systems.
MiFID II is the latest in the range of global regulations implemented in ADEPT which has been in live production since March 2014, and which now encompasses derivatives and securities across all asset classes, all G20 aligned regulatory regimes, global CCPs and execution platforms. ADEPT supports eligibility and scope of obligation determination for 14 critical MiFID II/MiFIR mandates.
*Akoma Ntoso ("linked hearts" in Akan language of West Africa) defines a set of simple, technology-neutral electronic representations of parliamentary, legislative and judiciary documents for e-services in a worldwide context and provides an enabling framework for the effective exchange of "machine readable" parliamentary, legislative and judiciary documents such as legislation, debate record, minutes, judgements, etc.
Five of the world’s leading financial institutions have committed to using Droit Financial Technologies (“Droit”) as their choice for MiFID II trade compliance. The decision by BNP Paribas, Crédit Agricole CIB, Goldman Sachs, Lloyds and UBS represents a watershed in the industry search for a strategic solution in the run-up to the implementation of the new European regulations.
Droit currently provides enterprise infrastructure to 11 global financial institutions to facilitate compliant and optimal trading of derivatives and securities across all asset classes all G20 aligned regulatory regimes, global CCPs and execution platforms.
“Droit is a central part of our eligibility architecture as we prepare for MiFID II, and we continue to enjoy a strong and collaborative working relationship with the Company,” said Jo Hannaford, Managing Director, Technology Division, Goldman Sachs.
Droit’s ADEPT platform generates the full global cross-regulatory implications and obligations of a trade in real-time. This enables institutions to implement a comprehensive approach to regulatory pre-trade decision making and accurate execution of pre- and post-trade obligations. MiFID II is the latest in the range of global regulations implemented in ADEPT.
“The complete digitalisation of capital markets pre- and post-trade processes is a considerable challenge for investment banks, as it requires a deep understanding of the regulatory texts and mastering the use of data products and cutting-edge technologies. Droit and its ADEPT platform were a logical choice to accelerate the Information System transformation that Crédit Agricole CIB is undergoing to be MiFID II compliant. Our ultimate goal is to deliver an improved experience to our clients,” said Samy Beji, Global Head of Structuring and Deputy Sponsor MIFID II programme for Crédit Agricole CIB.
ADEPT comprehensively supports eligibility and scope of obligation determination for the following MiFID II/MiFIR mandates:
“We take an agile approach to technology, working with leading external providers as well as developing digital solutions in-house, as part of our strategy to stay at the cutting-edg of digital global markets. Working with companies like Droit enables us to stay at the forefront of technological development, rapidly respond to changes in the industry and ultimately deliver the best outcomes to our clients,” said Cyril Cottu, Global Co-head of Electronic Market-Making and Commerce at BNP Paribas Global Markets.
“Transactional compliance requires the knowledge, maintenance and automation of extremely complex global rule systems,” said Satya Pemmaraju, Founding Partner and CEO of Droit. “Knowing who you can trade with, what you can trade and where you can trade is considerably more involved than even five years ago. These real-time, point-of-inquiry demands provide further challenges for a strategic infrastructure. Collaboration with our sophisticated client base has produced a mission-critical platform proven to meet these challenges for MiFID II, as well as other global regulations.”
Droit enables low latency decisions, integrating with front office e-trading and voice sales/trader workflows. Through a simple interface, the ADEPT platform has built-in traceability to fully digitised regulatory text, as well as complete, human-readable, auditability of every decision on every inquiry.
Droit Financial Technologies ("Droit") is significantly increasing its investment in Europe. In addition to expanding the London office in January, the firm appointed Keith Tippell to run Sales and Business Development, among a series of hires planned for early this year.
The investment in Europe comes alongside the completion of a MiFID 2 solution implementing cross asset MiFID 2 mandates within sales-trader voice and ecommerce trading systems.
Droit has an increasing major bank client base, and the appointment of Tippell will help expand the firm's footprint across the entire spectrum of sell-side and buy-side financial institutions.
Tippell joins from SWIFT, where he was Managing Director, Head of Securities and FX Markets. Prior to this, he spent eight years at Markit, where he was Managing Director, Product Management and Business Development in the MarkitSERV division.
"Keith's appointment is key to our European expansion," said Satya Pemmaraju, CEO of Droit. "He has a keen understanding of the industry and market micro-structure, which are so fundamental to the value we provide to clients. His appointment is part of a string of London-based hires, as we look to help market participants deal efficiently with the trading and compliance challenges that MiFID 2 presents."
"When Satya presented the opportunity, the decision was a simple one," said Tippell. "Droit is one of the most impressive regulatory technology firms in the world. Working in a complex, fast-paced environment with technology and a team that allows customers to take a holistic approach to regulatory compliance and optimization is tremendously exciting."
Droit, the industry standard for complex, real-time, regulatory decision making, has onboarded a growing list of global financial institutions since its first live install in February 2014. Starting with Dodd-Frank, the platform currently implements more than 12 global regulatory regimes within real-time trading and compliance systems.
The company was founded in 2012 by a team of veteran derivative traders, quants, ecommerce specialists and technologists with a mission to provide robust, enterprise infrastructure facilitating compliant and optimal trading of derivatives across asset classes, regulators, CCP's and execution platforms.
Droit recently moved into new London offices at Austin Friars, following a $16 million Goldman Sachs-led Series A financing round in October last year.