7.III.4 Background

The foregoing paragraphs show that the ISD covered no post-trade transparency rules for investment firms. ATSs and order internalising systems did not fall under the scope of the ISD. CESR provided post-trade transparency standards for ATSs, but the CESR standards were broad and formally non-binding. CESR also did not address post-trade transparency requirements for order internalising systems. As noted already in chapter 2, at least three reasons can be given that explain the bottom-up approach of the EU:

First, ATSs and order internalising systems were only a small phenomenon when the ISD was being drafted, as well as several years after the ISD entered into force.1 The Commission only addressed the role of new trading platforms in considering potential changes to the ISD.2 The FESCO paper on new trading platforms arrived in 2000, as followed by the CESR standards for ATSs in 2002. The CESR standards of 2002 were the first serious steps towards an (long-term) EU approach for ATSs. The EU did not feel a pressing need to intervene fiercely during the ISD. The first time the EU formally addressed ATSs and order internalising systems came only under MiFID I (see chapters 4 and 8).

Second, during the drafting process of the ISD it became clear that the ISD would include an optional concentration-rule. Member States were for this reason able to require concentration of trades on post-trade transparent RMs. RMs were in turn subject to ISD and in particular national post-trade transparency regulation (potentially supplemented by the RM rulebook).3

Third, and finally, national regulation enabled Member States to require completed trades of investment firms under the rules of RMs to be reported to, and subsequently be published by, RMs. As a consequence, the Member States could limit post-trade data publication by investment firms (ATSs and order internalising systems). 4