18.IV.1.1 Situation under the ISD

The EU strategy under the ISD was a mixture of regulation (top-down) and competition among national laws (bottom-up). As demonstrated, the ISD covered minimum harmonised pre- and post-trade transparency rules. The ISD pre- and post-trade transparency rules were limited to RMs (i.e. the traditional exchanges). In a nutshell, the limitation to RMs was because (i) some Member States argued that the RM design would have to be a ‘save haven’ for trading, including in terms of transparency1 and (ii) trading outside RMs, such as on alternative trading systems, was relatively limited when the ISD was drafted (i.e. focus on RMs – being the ‘traditional’ exchanges – was understandable at the time).2 The result was a limitation of the ISD equity pre- and post-trade transparency rules to RMs. The RM pre- and post-trade transparency rules of the ISD were laid down in a directive, which needed to be transposed into national law. Implementing measures were not in place. Emphasis of the ISD was on ISD post-trade (not: pre-trade) transparency rules for RMs. The ISD pre- and post-trade rules applied to all financial instruments set out in the ISD, such as shares and depositary receipts, but also bonds and derivatives.3