7.III.2.2 CESR standards for ATSs

CESR provided standards for ATSs a few years after the FESCO paper (the CESR standards did not address order internalising systems). CESR noted that market integrity could be enhanced where those wishing to trade can maximize their knowledge of ‘(…) recent trades across as wide a range of facilities trading an instrument (…)’.1 CESR provided post-trade transparency requirements for investment firms that (a) qualified as a ‘qualifying system’ and (b) provided trading in a financial instrument admitted to trading on an RM. The definition of ‘qualifying systems’ was almost identical to the MTF-definition introduced under MiFID I.2 In other words, the CESR definition of a ‘qualifying system’ was synonymous to an ‘ATS’.

CESR noted that investment firms with ‘qualifying systems’ needed to make public: (1) information relating to completed transactions that the system provides to users (2) on a reasonable commercial basis.3 CESR noted that the post-trade transparency requirements applicable for RMs in the respective Member State would serve as the benchmark for the post-trade transparency obligations for ATSs.4 As general rule, the post-trade transparency requirements only applied to financial instruments admitted to trading on an RM. However, where a financial instrument was not admitted to trading on any RM, CESR still encouraged the Member States ‘to move towards an adequate minimum level of transparency’ for investment firms with qualifying systems.5

CESR also made remarks on potential commercial initiatives for the publication of post-trade data by investment firms with qualifying systems, that is - bottom-up solutions. CESR noted that it expected investment firms with qualifying systems ‘to have strong commercial incentives to display the prices at which investments (…) have traded on their systems’.6 CESR added that were this was not the case, national regulation needed to address any adverse effect on market integrity arising from the absence of transparency.7

The foregoing indicates that the CESR guidance was broad. CESR did not lay down specific post-trade transparency obligations for investment firms with qualifying systems. Basic principles were laid down, but the details were the domain of national regulation. Neither were the CESR standards formally binding,8nor in place for order internalising system.9 As a consequence, the CESR approach for post-trade transparency obligations for investment firms was overall bottom-up.