5.VII.3.4.2 Interim conclusion

The ESMA MiFID II Review shows that ESMA wants to simplify the MiFID II share trading-obligation, as well as making it more strict. ‘Simplify’, because ESMA recommends to remove the MiFID II text referring to ‘between eligible and/or professional counterparties’ (i.e. simplify the exemption in excluding non-price forming trades). ‘More strict’, because ESMA also proposes to remove the first exemption (‘non-systematic, ad-hoc, irregular and infrequent’). If the ESMA proposal is rejected and the exemption is retained, the EU should clarify the exemption on Level 2. ESMA already wanted to clarify the provision in drafting MiFID II, but ESMA had no legal mandate to do so.1 The lack of clarification raises legal uncertainty under MiFID II, among other things, because MiFID II also uses somewhat similar wording (‘occasional, ad hoc, and irregular’) to clarify when investment firms trading on own account are not SIs.2 The ESMA proposals suit with the broader emphasis apparent in the ESMA MiFID II Review, namely to enhance transparency under MiFID II. If the ESMA proposals are accepted, more share transactions are required to take place on RMs, MTFs, SIs, or equivalent third-country venues. These venues are all subject to a relatively high standard of equity pre-trade transparency requirements.3