5.II.1.6.2 Equity-like instruments traded on a trading venue

Under MiFID I the pre-trade transparency rules only applied to (i) shares (ii) admitted to trading on an RM. Member States were permitted to expand the MiFID I pre-trade transparency rules to other financial instruments than shares admitted to trading on an RM. As a result, some Member States applied pre-trade transparency obligations to other financial instruments, such as depositary receipts, ETFs, and certificates, whereas other Member States did not.1 CESR noted that, from an economic point of view, many of the before-mentioned instruments were equivalent to shares. CESR therefore recommended the Commission to apply the MiFID II transparency regime to ‘equity-like’ financial instruments. CESR deemed equity-like instruments to be depositary receipts, ETFs, and certificates.2

The Commission adopted CESR’s recommendations in the MiFIR Proposal.3 The Commission complemented CESR’s recommendations by adding that the equity pre-trade (and post-trade) transparency regime under MiFID II would also need to apply to equity instruments traded on an MTF. Under MiFID I the transparency obligations only applied to shares admitted to trading on an RM. The Commission argued that, without changing the scope, the transparency rules would leave a potential difference in the level of transparency for instruments only admitted to trading on an MTF.4 Another part of the Commission proposal was to include also equity-like instruments traded on an RM (not only admitted to trading on an RM). The result would be that under MiFID II equity pre-trade transparency rules would apply to: (a) equity and equity-like instruments admitted to trading on an RM (for which a prospectus is mandatory), (b) equity and equity-like instruments traded on an MTF (e.g. a small cap company listed on the small cap MTF), and (c) equity and equity-like instruments traded on an RM (e.g. US blue chip company listed on a US exchange but also traded on an EU RM).5

The European Parliament had a similar view as the Commission. The European Parliament suggested the equity pre-trade transparency regime to apply to equity and equity-like instruments traded on an RM or traded on an MTF.6 The Council had a similar perspective as the European Parliament (and in effect as the Commission).7 This is apparent in the final MiFIR text. MiFIR subjects RMs and MTFs to an equity post-trade transparency regime for shares, depositary receipts, ETFs, certificates and other similar financial instrument (relabeled as ‘equity’). The MiFIR rules only apply where the equity instrument is traded on the RM or MTF, instead of to equity instruments admitted to trading on an RM.8