18.IV.2.3.2 Main changes from MiFID I to MiFID II: equity pre-trade data

The EU strategy is less intrusive when it comes to the MiFID II framework for equity pre-trade data publication and consolidation. There are two reasons why this is the case. First, the main worries under MiFID I were about fragmentation of post-trade, rather than pre-trade, data.1 Second, consolidation of pre-trade data, which is greater in magnitude than post-trade data, is more technically challenging and costly compared to post-trade data consolidation.2 The result is an EU strategy that leaves more flexibility for equity pre-trade data publication and consolidation under MiFID II. MiFID II gives choice in the publication and consolidation of equity pre-trade data, which reflects the earlier MiFID I-regime. That being said, the EU has some new top-down elements. Compared to MiFID I, the rules for equity pre-trade data publication arrangements have become stricter. This is primarily evident in the publication rules for SIs. Several rules have been laid down to ensure reliable and timely publication of SI equity quotes.3 The emphasis on SI publication is best understood against the broader MIFID II aim of ensuring that, compared to MiFID I, more trading takes place on regulated venues, including SIs.4 In the context of equity pre-trade data consolidation, MiFID II still largely uses a bottom-up approach. Similar to the previous regime, MiFID II relies on market forces to provide a consolidated view of pre-trade information. At the same time, MIFID II provides some top-down consolidation elements that were not in place under MiFID I. First, MiFID II covers more preconditions to support adequate consolidation, most notably through the MiFID II requirements for publication arrangements (i.e. APAs can – but are not required – to publish MiFID II equity pre-trade data).5 Second, MiFID II permits (not: obliges) CTPs to provide additional services in the area of equity pre-trade data consolidation.6