18.II.1 Option one: a narrow definition

The first element of the research question concerns what EU equity pre- and post-trade transparency regulation is.1 To approach this question one can use a narrow or a broad definition. A narrow definition defines EU equity pre- and post-trade transparency regulation by merely taking into account the individual components of the term. More specifically, this means that a narrow definition would define EU equity pre- and post-trade transparency regulation based on its four components, namely: (1) EU regulation, (2) equity, (3) pre-trade transparency, and (4) post-trade transparency. EU regulation refers to rules from the EU level, which includes Level 1 and Level 2 measures, and under a more wide-ranging view also informal guidance, in particular Level 3 measures (e.g. a Q&A of ESMA). The term ‘equity’ refers to shares, but can also include equity-like instruments, such as depositary receipts, ETFs, and certificates or other similar financial instruments.2 Under such a reading, pre-trade transparency refers to published data before a trade (ex ante). Post-trade transparency refers to published data after a trade (ex post). Putting all these components together, a narrow definition of EU equity pre- and post-trade transparency regulation would constitute (i) EU measures that (ii) require (iii) the publication of (iv) equity (v) pre- and post-trade data, including the person responsible for publication (e.g. an RM or MTF), the content of the equity pre- and post-trade data, and the timing of the publication.

A main advantage of a narrow definition of EU equity pre- and post-trade transparency regulation is its clarity. A narrow definition considers publication and consolidation services, as well as equity pre- and post-trade data prices to be related, but not identical to equity pre- and post-trade transparency. The narrow definition makes clear that publication and consolidation arrangements, as well as equity pre- and post-trade data prices, are up to national law, market forces, and/or other areas of EU law (e.g. competition law or intellectual property law) (i.e. not EU equity pre- and post-trade transparency regulation).

A disadvantage of a narrow definition is that it does not necessarily give an accurate description of the current EU situation. Whereas under the ISD and, also to some extent, under MiFID I EU equity pre- and post-trade data regulation mainly concerned the mandatory disclosure of equity pre- and post-trade data within a certain timeframe, this no longer holds true under MiFID II. MiFID II (also) includes a detailed framework for equity pre- and post-trade data publication and consolidation arrangements, as well as EU rules to ensure equity pre- and post-trade data prices are ‘reasonable’. The aspects of publication, consolidation, and data prices fall outside the scope of a narrow definition of EU equity pre- and post-trade transparency regulation.