Looking Ahead to Fall's Hot Topics

September 22 might be the first official day of fall, but if we’re all being honest with ourselves, summer truly ends on Labor Day. The leaves don’t need to change for me to start considering it autumn. For me, the opening of the NFL and college football seasons indicates that it’s time to put the bathing suit and tank tops in storage for another year. 

This shift is particularly interesting in financial services, where it seems like the entire industry is finally waking up after a brief hibernation during the warmer months. August in particular—especially in Europe where the entire continent seems to go on vacation together—is slow as everyone tries to enjoy those last bits of summer before the colder weather closes in.

And so here we are, with roughly four months to go before the winter holiday season, which is the next time the industry collectively shuts down for an extended period of time. But before the holiday decorations go up, there is still plenty to be sorted out.

Blockchain: Boom or Bust

It wouldn’t be a forward-looking technology column without mentioning blockchain, and for good reason. Distributed-ledger technology is seemingly all anyone in the space can talk about. However, the last four months of the year will be important for the disruptive technology. 

With the amount of time it takes to install and test new systems, the coming months will be vital for firms to ensure they hit the deadline.

There are a wide range of predictions on how impactful blockchain will be to banks. With that being said, many experts in the space have predicted a use case will be implemented by the end of 2016. 

This fall will also mark two years since blockchain first made a splash at the 2014 Sibos conference. Since that point, there have been an increasing number of reports and announcements around distributed ledger, but no substantial implementations at banks thus far. The longer that goes on, the more people will question blockchain’s actual impact. 

IEX

Late last month, IEX officially went live as the 13th US stock exchange. Few firms are as polarizing in financial services as Brad Katsuyama’s trading venue. Supporters say it represents the way markets should be run. Those who oppose it say its speed bump further complicates the market. Both sides will view the success or failure of the exchange as adding validity to their points. 

Editor's Note: Check out Dan's conversation with co-founder and president of IEX, Ronan Ryan, on the Waters Wavelength podcast.

How the market adapts to IEX over the coming months will be what’s most interesting. Bob Greifeld, Nasdaq CEO, announced on August 15, during an interview with Bloomberg, that the exchange would be adding the Extended Life Order, which is geared toward those looking for long-term liquidity. 

Nelson Griggs, Nasdaq’s executive vice president of listing services, said in a press release that feedback from the buy side and issuers was the reason for developing the new order type. However, the fact the announcement came just days before IEX’s official launch is a telling example of how threatened Nasdaq feels by IEX. It will be interesting to see how others react.

MiFID II

As someone that has to deal constantly with deadlines, I can tell you there is nothing quite as relieving as getting a postponement on when an assignment is needed. Eventually, though, the deadline is upon you before you know it.

That’s the case with Markets in Financial Instruments Directive II (Mifid II), the introduction of which was delayed by one year to Jan. 3, 2018, last February. Firms are now less than 18 months away from its implementation. These next few months will be key for firms, as they will have less than a year left to get their systems in order once they return from holiday following the New Year. With the amount of time it takes to install and test new systems, it’s clear that the coming months will be vital for firms looking to ensure they hit the new deadline.