MiFID Compliance Testing
Writing by Durga on Tuesday, 17 of February, 2009 at 11:42 am
To increase competition and consumer protection in investment services, there emerged MiFID (Marketing in Financial Instruments Directive), a highly developed version of ISD (Investment Services Directive), a harmonized regulatory regime for investment services, intended to create a more open, competitive, and transparent market for financial services across the European Union. With the deadline for MiFID looming large, many organizations operating in the financial markets are compelled to think about the systems they will need in place for them to adhere to this new legislation.
With technology underpinning MiFID concept, it stands a mandate that companies fall well within its compliance limits.
However, in implementations of this nature, many often fall short due to inefficiencies in quality assurance and testing. And if the loopholes appear in MiFID strategies due to inadequate testing procedures, serious problems like financial penalties, damage to the company’s reputation, the start of a problematic relationship with the FSA and above all, failure to adhere to this legislation could result in legal consequences for the business.
For the MiFID compliance, AppLabs ensures that the coverage and prioritization of testing meets the needs of the business and reduces the inherent risks involved in making high-impact changes on IT systems. AppLabs analyzes, re-engineers, upgrades or even replaces the key applications. AppLabs provides the new levels of regulatory reporting and transparency, timely provisioning and testing of such systems, which ensures a definite edge in the marketplace. In addition, AppLabs performs interface and integration testing for matters such as publishing ‘firm prices’, getting data for the best execution and transaction reporting, audit trail and so on. Performing of comprehensive regression test suites, automates the extra information required for the new Suitability and Appropriate Tests, customer categorization information, changes to the underlying database structure and so on. This provides tremendous benefit to an organization introducing new functionality in a faster pace.
AppLabs is significantly enhanced to satisfy the new demands of MiFID to support the Best Execution directive. To avoid further risks, AppLabs, in addition to the comprehensive regression test on existing functionality, conducts performance testing, as at this stage it is fundamentally important since Best Execution relies on market data being available in real-time with trading systems and market feeds potentially under heavy load. Capacity planning and so-called database bulking are also the important parts of this testing process.
Compliance with MiFID hence implies major rework and enhancement of a variety of IT systems within many investment companies across the EU, and above all the pressure of the deadline. It has therefore never been more important that affected companies plan and execute thorough regression and performance tests, while also deploying monitoring technology to ensure compliance with MiFID once new or enhanced systems go live.
Category: Compliance Testing, MiFID
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