4.III.4.2 Background

As noted above, in drafting MiFID I the Commission initially proposed investment firms to publish firm quotes (in a specified size and for liquid shares) to ‘other investment firms and eligible counterparties’.1 The European Parliamant overturned the position of the Commission. The European Parliament suggested that under MiFID I SIs would be able to decide the persons they accepted as their clients and consequently with whom they dealt on the quoted prices (rather than to ‘other investment firms and eligible counterparties).2 The perspective of the European Parliament reflected the aim to protect SIs, since the general public would not be able to access the system of the SI. The Council approved the position of the European Parliament. The Council also added the possibility for SIs to (a) limit the risk of being exposed to multiple transactions from the same client.3 To protect SIs against multiple ‘hits’, protections against executions from the same client were proposed.4 During a later stage, (b) the possibility of protection for multiple hits from different clients was added to the possibilities as well.5

In sum, the final MiFID I text reflected a weakened version of the Commission’s proposal. The final MiFID I text permitted SIs to choose their clients, thereby mitigating their exposure risks (within non-discriminatory boundaries). In addition, SIs were permitted to protect themselves against multiple hits, both from the same and different clients (see paragraph 4.1 above).