17.IV.4 Background

The MiFID II-rule to make equity pre- and post-trade data free of charge 15 minutes after publication is not entirely new. Despite the lack of a formal requirement, already under MiFID I several trading platforms made equity post-trade data available free of charge 15 minutes after publication.1 Even during the ISD timeframe equity post-trade data was made available free of charge 15 minutes after publication (although not required by the ISD).2 During the MiFID I-review, CESR proposed to formalize this practice, that is – require equity post-trade (not: equity pre-trade) data to be made free of charge 15 minutes after publication. CESR said that such a practice would reduce the costs of equity post-trade data.3 In addition, CESR argued that the proposals would ensure a consolidated tape (i.e. consolidated equity post-trade data) that could be produced for free on a 15-minute delay basis.4

The responses to CESR’s consultation were overall positive. Market participants observed that most venues already provided equity post-trade data for free 15 minutes after publication. The majority in effect supported the proposal (similar to current practice across most venues).5 CESR replied by noting that a requirement (instead of a ‘common practice’) would ensure cooperation from all trading platforms, which would facilitate the quality of the consolidated data.6 In the end, CESR recommended the Commission to require equity post-trade data to be made available free of charge 15 minutes after publication.7

The Commission adopted CESR’s recommendation, while taking it a few steps further. The Commission’s MiFID II-Proposal required RMs and MTFs to make both equity pre- and post-trade data available free of charge 15 minutes after publication, instead of only equity post-trade data.8 Despite the expansion to equity pre-trade data, the Commission made clear that the main aim of MiFID II would be to reduce the costs of equity post-trade data.9 The focus on equity post-trade data was also apparent in the Commission’s MiFID II proposal for APAs and CTPs. The Commission only proposed APAs and CTPs to make MiFID II post-trade data free of charge 15 minutes after publication.10 No references were made to pre-trade data, an area in which APAs and CTPs would be able to perform additional services (i.e. APAs and CTPs would not perform core-services for pre-trade data).11 The European Parliament and Council accepted the Commission’s proposal.12 The proposal was accepted without further amendments. The latter is apparent in the final MiFID II-text (see paragraph above).

In sum, legislative history of MiFID II shows that the EU had a focus on the price of equity post-trade data. In drafting MiFID II, emphasis was on making equity post-trade data free of charge 15 minutes after publication. The rationale for doing so was the MiFID I-situation. A dominant view was that especially equity post-trade data was considered as too expensive.13 The foregoing is apparent in the final MiFID II text. MiFID II requires APAs and CTPs to make equity post-trade data (not: equity pre-trade data) free of charge 15 minutes after publication.14 The MiFID II-rules for free of charge post-trade data 15 minutes after publication do not apply to SIs.15 RMs and MTFs are required to publish both equity pre- and post-trade data free of charge 15 minutes after publication.

The EU did not deem it necessary to specify the requirement to make equity pre- and post-trade data available free of charge after 15 minutes through regulatory technical standards (level 2-measures). Uneasy with this situation, ESMA has provided guidance through a formally non-binding Q&A. The ESMA Q&A can be seen as a reaction to practices that took place after MiFID II entered into force. Several situations emerged that seemed contrary with the MiFID II-spirit. Take, for example, the situation where data was deleted briefly after 15 minutes. Although this practice was (and still is) not in violation with the letter of MiFID II, it is hard to unite with the MiFID II-aim of reducing market data costs, not to mention the more general goal of enhancing transparency in the financial market.16