5.III.2.2 Differences from MiFID I to MiFID II

There are also differences between MiFID I and MiFID II. MiFID II tightens the SI regime compared to MiFID I. This has resulted in the following changes:

1. MiFID II tightens the flexibility for SIs to decide their quote sizes (depth). Similar to MiFID I, the starting point is that SIs may decide on size or sizes at which they quote. However, MiFID II introduces a minimum quote size. MiFID II requires SIs to publish firm quotes in a minimum quote size of at least the equivalent of 10 percent of the standard market size of an equity instrument.1 MiFID I covered no minimum quote size.2 The intention of MiFID II in doing so is to ensure SIs publish meaningful pre-trade data (i.e. not very small sizes).3

2. MiFID II requires SIs to provide so-called two-way quotes. This means that each SI quote needs to include a firm bid and offer price (or prices).4 MiFID I was more flexible, in the sense that it permitted one-way quotes (bid or offer). MiFID II requires the two-way quotes to be made for a size or sizes which can be up to the standard market size for the class of equity instrument to which the financial instrument belongs. Also here, the intention of MiFID II is to make the pre-trade data SIs publish more meaningful (i.e. more information).

3. Both MiFID I and MiFID II permit(ted) SIs to withdraw their quotes under exceptional market conditions. MiFID II specifies examples for what ‘exceptional market conditions’ are. The examples include, among other things, where trading is halted on the most relevant market for that financial instrument.5