Reduced budgets impede voluntary adoption of Modern Monetary Theory, asserts FIX organization
The FIX Trading Community has recently launched the fifth iteration of its Market Model Typology (MMT 5.0), which includes a set of new voluntary flags designed to enhance transparency and granularity in trade reporting. These flags are intended to improve consistency for both on- and off-venue liquidity, aiding in the main goal of MMT: to improve liquidity visibility across Europe.
In a statement, Jim Kaye, executive director of FIX, emphasised the importance of realigning the reporting regimes as far as possible. He explained that the new voluntary flags are designed to allow market participants to identify and quantify liquidity, thereby facilitating a correct view of liquidity from the tape without the need for filtering.
Laetitia Visconti, a representative from Aquis Exchange, added that firms are more likely to implement voluntary flags when they're opening up the code for something mandatory. She also commented that accessible liquidity does not guarantee the ability to get all the trade, highlighting that liquidity, regardless of distribution method, is liquidity.
Alex Ings from UBS pointed out that the existing combinations of flags do not cater for all the scenarios used in the industry. He mentioned that the new voluntary flags are aimed at addressing these gaps, ensuring that the MMT 5.0 incorporates the regulatory requirements of both European and UK jurisdictions.
Inconsistencies between the European and UK CT regimes have been extensively discussed. To address this issue, FIX has been working closely with both ESMA and the FCA to understand the two regulatory regimes. Notably, in Germany, SIX Swiss Exchange and BMLL are currently working on the further development of the FIX Trading Community's Market Model Typology (MMT).
MMT defines four types of addressable liquidity: 'Interactable Liquidity', 'Multilateral Liquidity', 'Multilateral "Lit" Liquidity', and 'Multilateral "Lit" Liquidity (excluding batch auctions)'. These categories aim to remove unnecessary and duplicative reports from the tape, ensuring ease of use for investors.
The release of MMT 5.0 and its new voluntary flags is a significant step towards improving the transparency and consistency of trade reporting in Europe. As market participants begin to implement these flags, we can expect to see a more streamlined and informative trading landscape.
