6.VII Conclusion

Post-trade transparency refers to (1) the publication of (2) trade reports on completed trades in financial instruments (ex post). Post-trade transparency regulation includes the mandatory publication of post-trade information, which contrasts with voluntary publication. Post-trade data can include several types of information. The types of post-trade information can be divided in terms of (a) coverage, (b) speed, (c) volume, (d) time, and (e) identity disclosure (or anonymity). The types of data required in a market place depend on several factors. Main factors include the needs of different data users apparent in the market, inventory risk of liquidity providers, and the market setting (consolidated versus fragmented).

Another conclusion of the chapter is that the ‘optimal’ degree of equity post-trade transparency supports the optimal amount of liquidity and investor protection. Setting the right degree of equity post-trade transparency standard is challenging. The reasons for this are (i) different types of investors and financial instruments and (ii) whether the standard should be set through market forces (bottom-up), regulatory intervention (top-down), or a combination of both.

As will be shown see below, and as already briefly mentioned in the introduction, the EU has in the past decades shifted towards a more interventionistic (i.e. top-down approach) to ensure sufficient equity post-trade transparency. While doing so, the EU intends to leave room for market forces (bottom-up elements). This is because: (1) the EU rules are calibrated to different types of market entities (e.g. deferral for certain investment firms) and (2) the EU sets a minimum standard of equity post-trade transparency (i.e. the regulated entities can voluntarily publish equity post-trade data beyond the EU standard). The EU regime might become (even) more top-down after the MiFID II Review.