LPA Office

»It is not easy to know your way around in the current jungle of regulatory requirements. This is how we define success: To transform, optimise
and digitalise your process securely without interfering with your
daily business.«

Thomas Eitenmüller, LPA Managing Director


We help adjusting your processes by developing plans of action and options
for their implementation, as well as their integration into your
daily business.

Our Services for

New Requirements, Suitable Solutions for You

With the application of MiFID II (»Markets in Financial Instruments Directive«) and the associated regulation MiFIR (»Markets in Financial Instruments Regulation«) the investment services of many financial institutes have been regulated. For the European investment market these regulations mean an epochal change: because compliance processes around the customer transactions, products, and services have to be revised and re-structured during operation.

These Areas Are Affected by the
New Regulations MiFID II / MiFIR:

  • the customer focused investment business (with emphasis on private customers)
  • the trade and derivative trading as well as market infrastructure
  • he governance of affected service providers and market participants

We Support You in These Areas:

  • Sales and trading of Interest rate and currency derivatives: The requirements of MiFID II change the sales process of banks significantly: Regarding cost transparency, suitability, documentation of consultations, as well as the qualification of employees there are extended review, documentation, and transparency duties. These have severe consequences for the investment consulting of your customers.
  • Product governance: Product governance is supposed to ensure that issuers or product providers and sales only offer financial products to suitable target customers. To comply with these requirements investment firms are obliged to take various measures: Target market definition and information about sales strategies for every financial tool are supposed to guarantee that customers acquire financial products that are suitable for them. Knowledge, experience, investment horizon, as well as loss-bearing capacity of a customer have to match the product features and have to be declared »suitable«.
  • Regulation area: Systematic internalisation (and legal consequences):
    »Systematic internalisation« (SI) was introduced along with MiFID I but stayed limited to equity trading. »Systematic internaliser means an investment firm which, on an organised, regular, systematic, and substantial basis deals on own account by executing client orders outside a regulated market, an MTF (Multilateral Trading Facility), or an OTF (Organised Trading Facility)«. Through the extension of the concept by OTF and the term »substantial« the SI-system applies to equity instruments (ETFs, certificates etc.) and non-equity instruments like derivatives, bonds, and other structured financial instruments. Assessment basis for »substantial« is the proportion of the OTC trade of a financial instrument compared to the overall volume of trade of the firm, or the proportion of OTC trade of an investment firm compared to the overall volume of OTC trade of a financial instrument in the European Union.
  • Transparency and transaction reporting: The transparency requirements of existing pre- and post-trade transparency duties for equity trade in regulated markets introduced by MiFID I are extended under MiFID II by equity instruments (ETFs, certificates etc.) and non-equity instruments like derivatives, bonds, and other structured financial instruments. Furthermore, regulators want bilateral OTC products to be traded in OTFs. For trading facilities regulated under MiFID II, i.e. regulated markets (RM), MTF, and OTF the same rules for pre- and post-trade transparency apply. For SI the pre-trade transparency differs from that of regulated trading facilities. Pre-trade transparency is comprised of the publication of the current two-way price and market depth. Post-trade transparency requires a prompt publication of prices, volumes, and trading times.
  • Trade duties and strategies:
    MiFID extends the defined catalogue of trading facilities by OTF. The aim is to regulate the trade that occurs in non-regulated markets (RM and MTF). Derivatives that are sufficiently standardised have to be traded via regulated markets by financial central counterparties.
  • Requirements for algorithmic trade: Algorithmic trade according to MiFID II / MiFIR is defined as trade with a financial instrument »in which a computer algorithm automatically determines the order parameters, for example when to initiate the order, timing, price, and quantity, and how to process the order with limited or without human involvement after it is being filed«. Investment firms that trade this way have to comply with certain standards and reportings that particularly concern technical infrastructure, risk controlling, and transaction capacities, as well as implementation requirements.
  • Best execution (reports and execution principles): Following MiFID II banks have to publish annual »Tops 5 Reportings« about their execution venues and additional evaluating summaries about the achieved execution quality. Furthermore, MiFID II requires investment firms to document the »fairness« of a proposed price. For this purpose, banks must make processes and documentation for the adherence to their best execution policy available.
  • Clearing Requirements (Direct and Indirect): The MiFIR (Markets in Financial Instruments Regulation) comprises requirements on derivatives clearing. Since January 2018, derivative contracts traded on a regulated market need to be cleared via a central counterparty (CCP). Clearing members and clients being part of indirect clearing arrangements have to comply with higher contractual and collateral segregation standards. Clearing processes are restricted in terms of timing and information exchange between CCPs and clearing member. The requirements connect to the trading obligation for OTC derivatives introduced in MiFIR, which requires non-intragroup transaction of clearing obliged and liquid contracts to be executed on trading venues such as regulated markets, multilateral trading facilities and organised trading facilities. Market participants need to review their clearing contracts, processes and trading technologies in order to fulfil the recent changes in derivatives clearing and trading.

Our Gap-Analysis For MiFID II / MiFIR Covers:

  • Impact Assessment
  • Analysis of strategies, processes, and systems
  • Identification of fields of action
  • Planning of implementation measures

Our Implementation Around MiFID II / MiFIR Covers:

  • Development of targets and development of directional decisions
  • Development and conception of implementation solutions
  • Creation of detailed concepts, action plan, and implementation
  • Implementation of organisational adjustments
  • Implementation of technical adjustments (incl. test management)

LPA-Solutions for

Would you like to know more?

We will be happy to advise you.

Thomas Hungerkamp
Thomas Hungerkamp
Your partner for Regulation & Technology

Contact form

Thomas Hungerkamp
Thomas Hungerkamp
Your partner for Regulation & Technology