18.III.2.1.3 Post-trade transparency: liquidity and the nature and size of the venue

Liquidity is also a relevant element for equity post-trade transparency. The EU has traditionally upheld the opinion that - where liquidity is provided through large transactions - deferral of post-trade data publication is legitimate. The rationale here is that deferral of large transactions supports liquidity by giving protection against inventory risk (i.e. other market participants taking positions at the detriment of the recently expanded inventory of a market participant taking a large position).1 It is contentious, however, how long the time for deferral should be, as well as which conditions should be met.2

The nature and size of the venue play a less prominent role in terms of post-trade transparency. Under the ISD a minimum standard of post-trade data publication was seen as necessary for RMs. Alternative trading systems and order internalising systems were not subject to ISD transparency rules.3 The perspective changed under MiFID I, where the EU mandated equity post-trade transparency rules for RMs, MTFs, and investment firms operating outside such venues (including, but not limited to, SIs). Despite the differences in nature and size of these venues, MiFID I overall applied the same post-trade transparency rules to RMs, MTFs, and investment firms operating outside such venues. ‘Overall’, because lighter post-trade transparency rules applied to investment firms operating outside RMs and MTFs. The rationale here was, among other things, to alleviate (often smaller) investment firms operating outside RMs and MTFs from compliance costs.4 A similar perspective is apparent under MiFID II.5