4.II.1.5.4 Calibration to the trading system

Another change from the ISD to MiFID I related to the types of equity pre-trade data that RMs and MTFs needed to display. During the ISD timeframe only formally non-binding guidance of FESCO and CESR was in place concerning pre-trade data as published by RMs and ATSs (under MiFID I relabeled as MTFs).1 FESCO proposed calibration of pre-trade data publication to the underlying trading systems of RMs.2 CESR made similar statements with respect to ATSs.3 The ISD-text itself covered no harmonised provisions here.

By contrast, the MiFID I Level 1 text required the content of the pre-trade data, that is – the ‘current bid and offer prices and the depth of trading interest at those prices’, to be specified on Level 2. CESR assisted the Commission in drafting the level 2 rules. In doing so, CESR initially suggested an exhaustive list of trading models, being periodic auction, continuous order-driven and quote-driven markets.4 A majority of respondents to the CESR consultation disagreed with this position. It was argued that the exhaustive list of trading models would hamper innovation, limit the ability to adapt services to user needs, and reduce the competitiveness and flexibility of the European markets.5 This could result in a reduced use of RMs and MTFs, thereby limiting liquidity. In light of these views, CESR changed its position and proposed a non-exhaustive list of trading models for RMs and MTFs. The list encompassed continuous order-driven, quote-driven, and periodic auctions, as complemented by a final category to accommodate hybrid and new market models.6 The Commission accepted CESR’s suggestion. The foregoing was apparent in the final MiFID I text. MiFID I covered a fourth trading system (i.e. a residual category) in case a system was not considered to be a periodic auction, continuous order driven or quote-driven market.