5.III.4.1 General

MiFID II adopts the overall MiFID I framework when it comes to the access to SI quotes. Under MiFID II SI are allowed to decide the clients to whom they give access to their quotes. The decision needs to be based on the commercial policy of the SI and in an objective non-discriminatory way.1MiFID II requires that there need to be clear standards governing access to the SI quotes. SI may refuse to enter into or discontinue business relationships with clients on the basis of commercial considerations, including the client credit status, the counterparty risk, and the final settlement of the transaction.2

Similar to MiFID I, the MiFID II requirement leaves room to interpret the provision in a way that SI quotes only need to be made public to clients, instead of the general investing public. However, MiFID II does not intend such a limited reading. MiFID II also requires SI to make public their quotes in way that is ‘easily accessible to other market participants and on a reasonable commercial basis’ (see paragraph above).3 The reference to ‘other market participants’ indicates that the quotes need to be made public to the entire investing public (willing to meet the reasonable commercial terms), instead of merely to clients.4 The fact that the quotes need to be made public to the entire investing public (at reasonable commercial terms) does not mean that every investor can execute the firm quotes published, that is – ‘access’ the firm quotes. The SI can, within the boundaries of MiFID II, decide which SI clients can execute the firm quotes.5 MiFID I had a similar regime.6

MiFID II permits limiting the exposure to multiple transactions from (1) the same; and (2) different clients. A similar situation was in place under MiFID I. The rationale of the provision is that a quote of a SI can be executed multiple times, in contrast to an order on an RM or MTF, which disappears after execution. To protect the SI against ‘multiple hits’ from the same client, MiFID II allows SIs to limit in a non-discriminatory way the number of transaction from the client that they undertake to enter at the published conditions.7

SIs may also limit the total number of transactions from different clients at the same time. The latter is allowable only where the number and/or volume of orders sought by clients considerably exceeds the norm.8MiFID II introduces a definition of what constitutes ‘considerably exceeds the norm’ through a delegated regulation. The number of volume of orders shall be considered to considerably exceed the norm ‘where a SI cannot execute the number or volume or those orders without exposing itself to undue risk’.9 Under MiFID I no such definition was in place. MiFID II requires SIs to determine in advance, as well as in an objective and consistent manner with their risk management policy, when the number or volume of orders sought by clients is considered to expose the firm to undue risk.10