4.IV.1.2 Exceptions

The MiFID I obligation to immediately publish unexecuted client limit orders in shares admitted to trading on an RM was not absolute. Under MiFID I there were two exceptions to the rule, namely where:

The first exception, that is – the client expressly instructed not to display the unexecuted limit order, was in place to protect and give freedom to the client. Revealing client limit orders could cause markets to take positions at the detriment of the client. This could reduce the willingness of clients to provide limit orders and thereby reduce liquidity.2

The second exception enabled NCAs to waive the publication requirement in relation to unexecuted client limit orders large in scale compared with the normal market size. The rationale behind the waiver was similar to the large in scale waiver in the context of the MiFID I pre-trade transparency obligations for RMs and MTFs.3 A large in scale waiver was in place, since publication of a large client limit order could result in intense price movements. Without the large in scale-exception the costs for executing client limit orders could rise (i.e. increase market impact), as well as affect the market for the share in question as a whole (i.e. increase volatility).4 The meaning of ‘large in scale compared with normal market size’ was the same for (i) the large in scale-waiver for RMs and MTFs (i.e. pre-trade transparency waiver available on RMs and MTFs) and (ii) the large in scale-waiver for the client limit order display-rule for investment firms operating outside RMs and MTFs.5