5.II.2.2.5 Rule-based provisions

MiFID II is more explicit about the use of the negotiated price waiver compared to MiFID I. Not only does MiFID II introduce (new) definitions of a ‘liquid market’ and negotiated trades ‘subject to conditions other than the market price’, but MiFID II also provides explicit provisions on the use of the waiver. First, MiFID II requires negotiated transactions to be carried out in accordance with the rules of the RM/MTF.1 Second, the RM/MTF needs to ensure that the arrangements, systems and procedures are in place to prevent and detect market abuse or attempted market abuse in relation to negotiated transactions in accordance with provisions of the Market Abuse Regulation (MAR).2 Third, the RM or MTF needs to establish, maintain and implement systems to detect any attempt to use the negotiated trade waiver to circumvent other requirements of MiFIR/MiFID II and to report attempts to the NCA.3 Fourth, and finally, MiFID II explicitly requires NCAs that grant negotiated waivers for liquid equity transactions or those not contributing to the current market price to monitor the use of the waiver.4