Time is yet another example of how MiFID 2’s range makes a simple concept fiendishly complicated.  Activities like high frequency trading (HFT) measure time in micro seconds and smaller intervals whilst a structured transaction that’s taken six months to negotiate often appears to be executed over several days as the final terms are specified.  The new rules attempt to cover both of these extremes and also define what is the benchmark for time, it’s UTC and where can you find it.

MiFID 2 sets higher standards for HFT venues and traders whilst still setting a minimum precision of a second for more traditional dealing methods.  One second may sound fairly easy to match but remember every few years the physicists decide to add a second to UTC (usually at year end) to keep this measure in time with the way the Earth and the Solar System currently operate.  This gives system architects a headache.  Every computer ships with an on-board clock chip running the mother board.  But I’ve never heard of one of these clocks being set up for leap seconds so software clocks over the network might be better, but then how fast is your network, if the server is in Europe and the trader is in Tokyo what time is it actually telling?   Lots of practical issues for the very large firms with global operations affected by MiFID 2.  Here’s a quick summary of the MiFID 2 rules.