18.IV.4 Concluding remarks

Under the ISD RMs and some alternative trading systems published a high amount of equity pre- and post-trade data and in due time. Data quality was overall high. Data was available in a consolidated way and at relatively low prices, given the concentrated market setting. However, these positive effects were mainly the result of the optional ISD concentration-rule and national law (high national standards for equity pre- and post-trade transparency on RMs). The broad and minimum harmonised ISD equity pre- and post-trade transparency rules had only limited effect.

A main area of success is the increase in scope of equity instruments from MiFID I to MiFID II. The result is more equity pre- and post-trade transparency compared to MiFID I.

Cross-border activities are cheaper due to the harmonised EU approach for equity pre- and post-trade transparency regulation.

Investor protection and the level playing field between trading platforms increased, although several concerns remain, most notably too limited equity pre-trade transparency, no consolidated tape, and too high equity pre- and post-trade data prices.

The MiFID II rules for mandatory publication of equity post-trade data result in sufficient amounts of equity post-trade data being published on a timely basis. However, concerns have been raised about equity post-trade data quality from APAs.

There are more SIs under MiFID II. Although the growth in SIs is controversial, the growth of SIs was envisioned by MiFID II through the new SI-definition.

Limited dark trading due to the double volume cap. The double volume cap resulted in suspensions of waivers for dark trading. At the same time, the double volume cap is controversial in light of complexity, the thresholds, and loopholes.

The EU has more data at its disposal to monitor market developments and adjust the equity pre- and post-trade transparency rules if deemed necessary. This is the result of the EU rules on data collection, calculation, and publication, as relevant for the MiFID II equity pre- and post-trade transparency regime.

Too limited EU intervention. Main examples of too limited regulatory intervention from the ISD to MiFID II are: (a) the scope of financial instruments (only shares admitted to trading under MiFID I); (b) minimum harmonised transparency rules (ISD, but also under MiFID I); (c) the reliance on market forces to achieve a consolidated tape (including too limited intervention for APA data quality) and (d) reliance on market forces to ensure reasonable equity pre- and post-trade data prices within certain EU boundaries. ESMA also believes that further intervention should be considered in the area of (e) RM/MTF waivers and (f) SI equity pre-trade transparency rules, the latter due to the growth of SIs under MiFID II.

Inadequate design of the EU rules. Design issues concern: (1) the SI-definition under MiFID I, (2) principle-based rules (waivers under MiFID I and data prices under MiFID II, such as the term ‘reasonable margin’), (3) no distinct regime for broker crossing networks under MiFID I, (4) the unclear MiFID II share trading-obligation (in terms of third-country shares and exemptions). ESMA also believes that there is currently (5) no appropriate MiFID II design for frequent batch auctions.

Too complex EU rules. The growth of EU equity pre- and post-trade transparency regulation has made the topic highly complex. Market participants, NCAs, and ESMA are required to comply with a wide set of detailed and technical rules. Particular complexities concern the operational nature of data collection, calculation, and publication (e.g. double volume cap and ESMA databases). Another complexity is that the increase in EU equity pre- and post-trade transparency regulation has the result of intervening with other areas of EU law, most notably competition law and intellectual property law (equity pre- and post-trade data prices).