EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/8.II.2.2:8.II.2.2 Conditions

EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/8.II.2.2

8.II.2.2 Conditions

Documentgegevens:

mr. J.E.C. Gulyás, datum 01-02-2021

Datum: 01-02-2021
Auteur: mr. J.E.C. Gulyás
JCDI: JCDI:ADS267285:1
Vakgebied(en): Financieel recht / Bank- en effectenrecht
Financieel recht / Europees financieel recht
Financiële dienstverlening / Financieel toezicht

The MiFID I Directive noted that the NCA of the RM/MTF was permitted to provide for deferred publication based on the type or size of the transaction involved.1 In particular, the NCA could authorize deferred publication in respect of transactions that were large in scale compared with the normal market size for that share or that class of shares.2 RMs and MTFs needed to obtain prior approval of the NCA concerning deferral arrangements and needed to clearly disclose those arrangements to market participants and the public.3

The MiFID I Implementing Regulation specified the conditions for deferral of post-trade publication. Deferred publication was permitted where:

1): the transaction was between an investment firm (i) dealing on own account and (ii) a client of that firm; and
2): the size of the transaction was equal to or exceeded the relevant minimum qualifying size set out by MiFID I.4

The MiFID I conditions meant that not all trading by investment firms on an RM or MTF were eligible for deferred publication of concluded transactions. Three points were of particular relevance:

First, MiFID I required the investment firm to ‘deal on own account’. MiFID I referred to dealing on own account as trading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments.5 MiFID I did not clarify whether this needed to be interpreted as being at market risk. MiFID I only referred to the conclusion of a transaction against proprietary capital.6

Second, MiFID I mandated the transaction to be with a ‘client’ (not: any counterparty) of the investment firm trading on the RM/MTF. Investment firms trading on an RM/MTF, that is - members and participants of the RM/MTF, were not considered to be trading with a ‘client’, except possibly through negotiated trades.7 The MiFID I possibility for post-trade transparency deferral on RMs/MTFs was therewith relatively narrow (compared to MiFID II).8

Third, and finally, the concluded transaction needed to be of a certain size in order to be eligible for deferred publication. The greater the size, the longer the permitted delay. The timeframes for delay included: (a) 60 minutes; (b) 180 minutes; (c) the end of the trading day; all the way up to: (d) the end of the third trading day after the trade.9

Toon alle voetnoten

Voetnoten

Voetnoten

Art. 45(2) and art. 30(2) MiFID I Directive.

Art. 28 MiFID I Implementing Regulation.

Art. 4(1)(6) MiFID I Directive.

See ESMA, Consultation Paper: MiFID II/MiFIR, December 2014(ESMA/2014/1570), p. 113-114. Consider the situation where the rules of an RM or MTF allow a trade to be negotiated between participants of the RM/MTF. In this example the participants are (a) an investment firm and (b) the client of the investment firm. The investment firm could negotiate a deal with the client under the rules of the RM/MTF. The negotiated trade would fall under the ‘system’ of the RM or MTF, since it was performed under the RM or MTF rules (recital 6 MiFID I Directive). The negotiated trade would in effect take place on an RM or MTF between an investment firm and ‘a client’. The trade would be eligible for MiFID I post-trade deferral, provided that the other MiFID I conditions for deferral were met.

See ESMA, Consultation Paper: MiFID II/MiFIR, December 2014(ESMA/2014/1570), p. 113-114. For an examination of the MiFID II rules for deferral of equity post-trade data publication, reference is made to chapter 9.

MiFID I distinguished four classes of shares in terms of average daily turnover (ADT). The ADT classes varied from: (i) ADT below EUR 100.000; (ii) ADT equal to EUR 100.000 and below EUR 1000.000; (iii) ADT equal to EUR 1000.000 and below EUR 50.000.000; and (iv) ADT equal to or above EUR 50.000. Within the ADT classes MiFID I prescribed the minimum qualifying sizes of the transactions permitted for delay (art. 28(a-b) and Annex II, Table 4 MiFID I Implementing Regulation).