EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/9.V.2.1:9.V.2.1 ESMA key proposals and observations

EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/9.V.2.1

9.V.2.1 ESMA key proposals and observations

Documentgegevens:

mr. J.E.C. Gulyás, datum 01-02-2021

Datum: 01-02-2021
Auteur: mr. J.E.C. Gulyás
JCDI: JCDI:ADS267116:1
Vakgebied(en): Financieel recht / Bank- en effectenrecht
Financieel recht / Europees financieel recht
Financiële dienstverlening / Financieel toezicht

ESMA also assesses the MiFID II equity post-trade transparency regime for investment firms trading outside RMs and MTFs (including, but not only, SIs). The MiFID II equity post-trade transparency for RMs and MTFs is almost the same as for investment firms operating outside such venues.1 ESMA considered several options in the ESMA consultation, but ultimately provides no recommendations to change the MiFID II equity post-trade transparency regime for investment firms operating outside RMs and MTFs (save for reporting and flagging requirements for FITRS, see paragraph 5 below). Accordingly, the ESMA recommendations for investment firms operating outside RMs and MTFs are as follows:

•: ESMA wants to keep the same deferral thresholds for investment firms operating outside RMs and MTFs versus RMs and MTFs.2

The ESMA recommendation is the consequence of the ESMA consultation, including feedback from respondents. ESMA observed during the consultation that the turnover of deferred transactions is significantly higher outside RMs and MTFs while the number of transactions is the same (in percentage terms).3 The reason, according to ESMA, is most likely the size of transactions taking place outside RMs and MTFs in conjunction with a broad MiFID II share trading obligation (also covering SIs) and exemption of post-trade transparency to certain types of transactions executed outside RMs and MTFs.4

Despite the higher use of deferral outside RMs and MTFs, ESMA does not propose different deferral thresholds for investment firms operating outside RMs/MTFs. Many respondents to the ESMA consultation agreed with ESMA. It was stressed that the requirements should be the same, for example, to avoid that investment firms operating outside RMs and MTFs take longer to report post-trade data than is the case on RMs and MTFs. Different post-trade transparency standards for investment firms operating outside RMs and MTFs can result in important price sensitive information being withhold compared to RMs and MTFs.5 Hence, ESMA recommends to keep the MiFID II equity post-trade transparency regime the same for RMs/MTFs and investment firms operating outside RMs/MTFs.6

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Art. 20 MiFIR. ‘Almost the same’, because investment firms operating outside RMs and MTFs are required to publish equity post-trade data through an APA, certain exemptions apply, and a different authorisation regime applies for deferral. For an examination, reference is made to section III above.

ESMA states that the vast majority of turnover executed on RMs and MTFs (85 percent) does not benefit from a deferral, in contrast to investment firms trading outside RMs and MTFs (approximately 63 percent) (.ESMA, Consultation Paper: MiFID II/MiFIR review report on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares 4 February 2020 (ESMA70-156-2188), p. 83)

ESMA, Consultation Paper: MiFID II/MiFIR review report on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares 4 February 2020 (ESMA70-156-2188), p. 21 and p. 87.

ESMA, MiFID II/MiFIR Review Report: on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares, 16 July 2020(ESMA70-156-2682), p. 34-35. For the sake of completeness, several respondents also believed that data quality of investment firms operating outside RMs and MTFs (through APAs) is an issue. ESMA addresses the matter in another MiFID II Review. For an examination, reference is made to part III of the research (chapter 13).