7.II.1 ISD equity post-trade transparency obligations

The ISD provided minimum harmonised post-trade transparency rules for RMs.1 The ISD post-trade transparency rules applied to each instrument covered by the ISD, among other things, shares, depositary receipts, and certificates, but also to bonds and derivatives.2 RMs were subject to the following post-trade transparency obligations:

The ISD post-trade transparency requirements were in place to ‘enable investors to assess the terms of a transaction’ and to ‘verify afterwards the conditions in which it has been carried out’.7 The ISD therewith intended to provide a degree of post-trade transparency that would support investors in making trading decisions, as well the ability of checking (monitoring) the effectiveness of their trading strategy.

If we look at the various types of post-trade information, such as speed and volume (see chapter 6 above), it shows that the ISD required RMs to publish only a limited set of post-trade information. This is in particular evident in the requirements for RMs deploying continuous order-driven and/or quote-driven markets (points 2-3). The ISD did not require real-time publication. Emphasis was on the publication of relatively late post-trade information (i.e. ‘at the end of each trading hour’ and ‘every twenty minutes’). The ISD also required post-trade information to be published concerning the previous day of trading on the RM (point 1).

The ISD post-trade transparency obligations were not defined in further detail. There was no clarification as to what constituted, for example, ‘the weighted average price’, let alone how such a weighted average price needed to be calculated.8 Various interpretations were also available as to what constituted the meaning of ‘so to leave two hours of trading on the market before publication’ (point 2) and ‘so as to leave one hour of trading on the market before publication’ (point 3).9 These elements illustrate the ambiguity of the ISD-text. Member States had great flexibility in interpreting the ISD post-trade transparency obligations. While this can be seen as beneficial in terms of facilitating different market structures (i.e. the ISD did not prescribe a ‘one-size-fits-none model’), the ISD also embodied legal uncertainty (conflicting interpretations).10

A related point was the minimum harmonised nature of the ISD post-trade transparency obligations.11 Member States were permitted to provide stricter post-trade transparency rules for RMs, which occurred in several Member States.12 Combined with the lack of detail, the minimum harmonised nature of the ISD gave substantial flexibility to the Member States with respect to post-trade transparency obligations for RMs. The foregoing illustrates that the ISD covered limited legal certainty with respect to the ISD post-trade transparency obligations.13