EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/5.VII.5:5.VII.5 Concluding remarks

EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/5.VII.5

5.VII.5 Concluding remarks

Documentgegevens:

mr. J.E.C. Gulyás, datum 01-02-2021

Datum: 01-02-2021
Auteur: mr. J.E.C. Gulyás
JCDI: JCDI:ADS266662:1
Vakgebied(en): Financieel recht / Bank- en effectenrecht
Financieel recht / Europees financieel recht
Financiële dienstverlening / Financieel toezicht

The MiFID II Review of ESMA shows that ESMA believes that MiFID II has been partially successful in achieving more equity pre-trade transparency compared to MiFID I (in particular due to expanding the scope of financial instruments). ‘Partially successful’, since main issues are detected in relation to the RM/MTF equity pre-trade transparency waivers (in particular the complex double volume cap), the level playing field between RMs/MTFs and SIs, and the MiFID II share trading-obligation.

To remedy the situation, ESMA takes a market-shaping perspective by enhancing concentrated trading on RMs, MTFs, and SIs and enhancing equity pre-trade transparency, as opposed to a market-led perspective (i.e. competition and investor choice’s, also of less transparent trading platforms). The ESMA proposals reflect willingness of ESMA to (1) enhance equity pre-trade transparency on RMs and MTFs; (2) increase equity pre-trade transparency for SIs, and (3) clarify and narrow the MiFID II share trading-obligation, except for third-country shares. ESMA does not want MiFID II to have extra-territorial reach, as visible in the ESMA proposal on the MiFID II share trading-obligation. The main difficulty here is excluding third-country shares from the MiFID II share trading-obligation scope. ESMA also proposes the MiFID II share trading-obligation to be specified on Level 2, which seems like a logical way forward. The MiFID II share trading-obligation is strikingly principle-based, which has resulted in legal uncertainty.

Last, but not least, the ESMA proposals show the data-driven nature of the MiFID II equity pre-trade transparency regime and the related operational complexity. ESMA proposes to simplify the double volume cap (i.e. maintain a single volume cap) and to improve trading data for FITRS. Several market participants want the EU to intervene more in the area of reference data (top-down approach), but ESMA has taken a bottom-up view in this area (FIRDS). ESMA stresses that ESMA is not responsible for a ‘golden source’ of reference data.