18.IV.3.3.1 Main changes from MiFID I to MiFID II

The EU introduced top-down pricing elements under MiFID II. As illustrated in chapter 13, MiFID II has introduced three sets of rules in the area of data rates. The three rule-sets are: (1) the unbundling of pre- and post-trade data; (2) the specification of a reasonable commercial basis; and (3) pre- and post-trade data free of charge 15 minutes after publication. The MiFID II intention is to make pre- and post-trade data less costly compared to MiFID I, especially in the area of post-trade data. The rationale is that lower prices support access to pre- and post-trade data. In turn, such access contributes to the broader MiFID II goal of making the European equity markets more transparent.

MiFID II can be characterised as more top-down compared to MiFID I. Under MiFID II several regulatory-led elements govern the pricing of equity pre- and post-trade data. At the same time, the EU’s ascendency over data prices has not become total with MiFID II. The three sets of MiFID II rules leave flexibility for market data suppliers, such as RMs, MTFs, and data vendors. First, and in contrast with the previous regime, certain data vendors fall outside the MiFID II-scope. Certain data vendors provide consolidated data without being classified as an APA or CTP. Second, the entities that are subject to the MiFID II pricing rules retain flexibility through (a) principle-based rules (e.g. ‘reasonable margin’), (b) retaining the complete property of market data (instead of joint property with the transacting parties), and (c) permitting a degree of price discrimination (i.e. prices based on the value representing to certain data groups). Third, MiFID II relies to a great extent on competitive forces to correct potentially unreasonable prices/terms and conditions through disclosure-rules for entities selling equity pre- and post-trade data, being the so-called Transparency Plus Approach. The underlying premise of the Transparency Plus Approach is that the general public can engage in a dialogue with the ‘unfair’ market data supplier, litigate on the matter, or choose another market data supplier instead. The limitation in scope, flexibility for data sellers, and a controlling factor for the general public, make the MiFID II pricing-rules relatively light in nature. ESMA has provided a formally non-binding Q&A (soft-law). The ESMA Q&A makes the MiFID II-regime hybrid in nature. The MiFID II regime now consists out of broad and formal MiFID II-rules on the one hand, and soft-law provided by ESMA on the other hand.