5.III.3.2.1 Rule-based provisions

First, MiFID II adds rule-based provisions. The most notable example here is the criterion of ‘prices falling within a range close to market conditions’, a requirement for price improvements relevant for price formation. In drafting MiFID II, ESMA noted that the MiFID II text requires SI quotes to reflect prevailing market conditions. In ESMA’s view this meant that the quotes would need to be close in price to comparable quotes for the same instrument in RMs and MTFs.1 As a consequence, ESMA was of the view that any price falling within the bid and ask spread quoted by the SI would fall within a public range close to market conditions for that financial instrument.2 The Commission adopted ESMA’s recommendation in the final MiFID II text.