8.III.3 Concluding remarks

A main novelty of MiFID I was the introduction of a post-trade transparency regime for investment firms operating outside an RMs (and MTFs, as introduced under MiFID I). The MiFID I post-trade transparency regime was part of the broader MiFID I framework to promote competition between RMs, MTFs, and investment firms trading outside such venues. The EU considered a high degree of post-trade transparency also essential for investment firms trading outside an RM/MTF. The post-trade transparency regime for investment firms operating outside RMs/MTFs was overall the same as for RMs and MTFs. Main arguments for an overall similar approach were the protection of price discovery process for shares, in particular following the fragmentation risks of the competitive MiFID I approach, and a level playing field across RMs, MTFs, and investment firms operating outside RMs and MTFs. ‘Overall’, since exceptions were in place given the less regulated category of investment firms operating outside an RM/MTF. First of all, investment firms operating outside RMs and MTFs were exempted from post-trade data publication for certain transactions, such as securities financing transactions. Second, of all investment firms – also SIs under conditions – could publish anonymous post-trade reports, in contrast to the RMs and MTFs that needed to include the RM or MTF market identifier code. Similar conditions for deferral RMs, MTFs, and investment firms operating outside such venues were also in place. Similar to the RM/MTF regime, deferral was seen as vital in order to ensure investment firms could lay off their position risks. Lighter provisions were in place for the deferral procedure (not: the length and conditions) for investment firms operating outside an RM/MTF. The rationale here was to protect investment firms operating outside RMs and MTFs against unnecessary burdens of post-trade data publication.

The MiFID I post-trade transparency regime for investment firms operating outside RMs and MTFs was – similar to the RM/MTF regime – fairly top-down. MiFID I intended to ensure a high degree of equity post-trade transparency across the European share markets, regardless whether a share admitted to trading on an RM was traded on an RM, MTF, or outside RMs/MTFs. For this reason, highly harmonized post-trade transparency rules applied to investment firms operating outside RMs and MTFs. Similar to the RM and MTF regime, the framework directive (MiFID I Directive) provided the general post-trade transparency rules, which were supported by a directly applicable regulation (MiFID I Implementing Regulation). The rationale of the amount of detail and directly applicable rules was to ensure similar post-trade transparency publication across RMs, MTFs and investment firms operating outside RMs and MTFs in the EEA.

The MiFID I post-trade transparency regime was ‘fairly’ top-down, because the ascendancy of MiFID I was not total. First of all, the MiFID I post-trade transparency rules were limited to shares admitted to trading on an RM. Member States were permitted to expand the scope of the post-trade transparency rules, but this was not mandated. Second, investment firms operating outside RMs and MTFs (and RMs and MTFs as well) could publish more equity post-trade data than prescribed by MiFID I. Third, the post-trade transparency obligations (not: deferral) were minimum harmonised. Member States were permitted to lay down stricter rules than those laid down by MiFID I (the wording ‘at least’ was used). Fourth, the NCAs retained the final responsibility for granting deferral arrangements. An investment firm operating outside an RM or MTF needed to request deferral with the relevant NCA, instead of an EU institution (in case the NCA had not already granted deferral to an RM or MTF, see paragraph 2.2 above).