7.II.2 FESCO guidance on post-trade transparency obligations

FESCO was not satisfied with the ISD approach. Whilst FESCO recognized that ‘appropriate transparency arrangements may need to differ according to the nature of RMs’ (i.e. the ISD set minimum standards, thereby leaving flexibility for different trading systems operated by RMs),1 FESCO also believed that the minimum set of ISD post-trade transparency rules required additional guidance. FESCO noted it was one of the most important functions of RMs to have a price formation process that ‘produces prices that reflect the free balance of supply and demand in a particular security’.2 To achieve such a result, FESCO recommended RMs to do the following:

FESCO recommended to ensure (a) real-time publication of (b) price and (c) volume of all completed transactions, including (d) ‘off market’ trades under the rules of the RM.3 FESCO clarified that (i) trades completed by members or participants of an RM that were (ii) not executed through the technical systems of an RM (‘off market’), but (iii) still executed under the rules of an RM, (iv) needed to be included in the post-trade information published by RM (point d: ‘off market’ trades published under the rules of the RM).4

In other words, FESCO required faster publication (real-time) and more in-depth post-trade information (price and volume of all completed trades) compared to the ISD (points a-c). FESCO also expanded – or at least clarified – the scope of RM publication (point d). In sum, FESCO recommended RMs to publish more and faster post-trade data compared to the ISD.