9.V.4.1 ESMA key proposals and observations

MiFID II covers no explicit guidance in relation to third country transactions1 and the MiFID II equity post-trade transparency regime. The result is legal unclarity, in particular in relation to the MiFID II equity post-trade transparency regime for investment firms operating outside RMs and MTFs.2 ESMA has provided guidance, among other things, in the form an Opinion. The ESMA Opinion concerns the situation where an investment firm operates outside an RM and MTF on a third country trading-venue and under which conditions the MiFID II equity post-trade transparency do (or do not) apply. ESMA publishes a ‘positive list’ in case the third country trading venue fulfills the ESMA conditions. The ESMA Opinion intends to avoid double reporting (i.e. the third country trading venue already ensure sufficient post-trade transparency) whilst ensuring that trades executed by EU investment firms are indeed subject to equity post-trade transparency.3 ESMA addresses the ESMA Opinion in the ESMA MiFID II Review. ESMA recommends the following:

Already during the consultation, ESMA saw no merit in changing the MiFID II text. ESMA considered that the use of the ESMA supervisory tools (i.e. an opinion) has allowed to achieve the objectives of MiFID II whilst promoting supervisory convergence within the EU.5 ESMA observes that a large majority of respondents across all categories explicitly support ESMA’s approach to third-country trading venues for the purpose of the MiFID II equity post-trade transparency regime. Most respondents agreed with ESMA’s proposal to maintain the ESMA Opinion.6 Some stakeholders added that ESMA could publish a ‘negative list’ of third country trading venues, which was considered as more efficient than a long positive list. In addition, some stakeholders disagreed with ESMA’s proposal and proposed a change of the Level 1 text in order to enhance legal clarity. Although ESMA acknowledges that a clear Level 1 mandate would ensure further legal clarity, ESMA also sees that a large majority of respondents to the consultation is sufficient with the current ESMA Opinion. For this reason, ESMA proposes to maintain the current ESMA Opinion.7 ESMA prefers a positive list (and no negative list) of third-country trading venues. ESMA argues that the publication of a limited number of non-eligible third-country trading venues (i.e. a negative list) would put unnecessary focus on those venues.8