5.III.5 Concluding remarks

A main aim of MiFID II is to ensure that more trading moves to regulated venues, including SIs.1 To achieve this result, MiFID II makes several alterations to the previous regime. Several top-down elements have been added. MiFID II expands the scope of financial instruments (equity instruments), introduces qualitative elements for the SI definition, tightens the pre-trade transparency rules, and reflects a shift towards a more rule-based regime. MiFID II still covers a lighter pre-trade transparency regime for SIs compared to RMs and MTFs, but intends to improve the level playing field and to enhance pre-trade transparency compared to MiFID I.2 One could say that the MiFID II goal is two-fold. First, MiFID II wants to enhance the amount of SIs compared to MiFID I, and second, MiFID II wants to reduce the amount of dark trading through SI trading.

Some developments suggest that MiFID II is able to deliver on these ambitions. Under MiFID II the amount of SIs has grown substantially, which means that more investment firms are subject to, as well as stricter, pre-trade transparency rules. But then, concerns remain. The SI regime could be used to circumvent the double volume cap and the tick size rules for RMs/MTFs and SIs differ. Guidance from ESMA aimed to rebalance the situation, but the solution was not perfect. Yes, the top-down approach of MiFID II resulted in more pre-trade transparency and enhanced fair competition among SIs and RMs/MTFs. However, adjustments on Level 1, in particular of the tick size, were deemed necessary to ensure there would be a true level playing field and sufficient transparency. For this reason, the Commission introduced stricter tick size rules for SIs.3 The new MiFID II tick size regime for SIs intend to enhance transparency (i.e. less price improvements, and accordingly less price changes, are permitted) and to enhance the level playing field between RMs/MTFs and SIs (i.e. similar tick size rules for SIs).4