18.IV.1.1.3 Interim conclusion

Experience with the ISD illustrates that minimum harmonised and principle-based transparency rules can result in a high amount and timely equity pre- and post-trade data. Under the ISD this was the case due to national law prescribing high standards of pre- and post-trade transparency or RM and some alternative trading system rulebooks doing so, as approved under national law. Concerns were discrepancies in transparency regimes across the EU, which had the potential to harm the level playing field and higher costs of cross-border trading across the Member States. Under the ISD these risks were initially not acute due to the concentrated market setting. Fragmentation risks, such as a harmed price formation process or a lack of a level playing field, were relatively low, since trades mainly took place on or were reported to one (or a few) RMs.1 Despite these advantages of the concentrated market setting, the ISD situation also encompassed disadvantages. First, CESR identified risks in terms of price formation and a level playing field, thereby introducing equity pre- and post-trade transparency standards for alternative trading systems.2 Second, a necessary precondition under the ISD was the concentration of trading on one (or a few) trading platforms. Although the concentrated market setting had benefits in terms of concentrated liquidity (equity pre- and post-trade data on one or a few platforms), it also limited competition, innovation, and investor choice.3