3.I Introduction

The Investment Services Directive (ISD) was adopted in 1993.1 The ISD was the EEA framework for RMs and investment firms until the introduction of the Markets in Financial Instruments Directive (MiFID I) in November 2007. The ISD introduced one common pre-trade transparency rule within the EEA. The ISD pre-trade transparency rule was part of the broader ISD aim of (a) protecting investors and (b) ensuring the smooth operation of the financial markets.2 To support the two-fold aim, the ISD permitted (not: obliged) Member States to require investment firms to route certain orders in financial instruments to RMs (i.e. concentration of trading).3 The ISD made a distinction between (1) RMs4 and (2) investment firms (MTFs and SIs did not yet exist).5 RMs were subject to the ISD pre-trade transparency rule. The ISD pre-trade transparency rule was minimum harmonized (similar to the ISD post-trade transparency provisions). Member States were permitted to lay down stricter pre-trade transparency rules than the one set by the ISD.6 This was in practice often the case.7 Investment firms were not subject to the ISD pre-trade transparency rule.8 In other words, during the ISD timeframe, pre-trade transparency regulation for investment firms was entirely at the discretion of the individual EEA jurisdictions.