8.II.2.4.3 Conditions

Under the ISD broad conditions were in place permitting the NCAs to delay or suspend publication.1 By contrast, the MiFID I Directive empowered the Commission to adopt implementing measures in respect of the conditions under which RMs and MTFs could provide for deferred publication of trades.2 CESR advised the Commission in this context. CESR noted that the purpose of delayed publication was to encourage the provision of liquidity to the market by giving the intermediary some time to lay off its position. CESR argued that therefore intermediaries should be able to benefit from delayed publication only where they entered into a transaction in order to (a) facilitate ‘third party business’. Otherwise the firm was not deemed to be providing a service in the form of liquidity provision. CESR noted that a firm that executed a client order facilitated ‘third party business’.3 Furthermore, CESR assumed that (b) any principal transaction through which a firm executed a client order (i.e. facilitates third party business) (c) above a certain size would potentially create a risk position for the firm, and as a consequence needed to be eligible for delayed publication.4

The Commission accepted CESR’s recommendations. This was apparent in the final MiFID I text. MiFID I only permitted deferral where (1) an investment firm traded on own account; (2) with a ‘client’ of the investment firm. The basis assumption under MiFID I was that where the investment firm traded on own account (with a client) above the specified sizes, the investment firm would be at risk, and accordingly was eligible for deferred publication.5 In reflecting CESR’s recommendation, MiFID I did not explicitly require the investment firm trading on own account to be at risk.