13.VI Conclusion about MiFID II

MiFID II is a reaction to the framework for equity pre- and post-trade data publication and consolidation under MiFID I. MiFID II aims to keep a competitive market setting, but intends to mitigate the problems of MiFID I. Problems under MiFID I included too limited data quality and consolidated data, in particular in the area of equity post-trade data. MiFID II responds by introducing a framework for APAs and CTPs with the core-task of facilitating reliable and consolidated equity post-trade data.1MiFID II also encompasses additional detail on equity post-trade data reports, reliability, and timely publication. Although not a main policy objective of MiFID II, MiFID II also results in more harmonisation (EU regulation) for the publication and consolidation of equity pre-trade data. MiFID II permits APAs and CTPs (and ARMs) to provide publication and consolidation services for equity pre-trade data. In sum, the EU’s ascendancy over equity pre- and post-trade data publication and consolidation services has grown from MiFID I to MiFID II. However, the EU’s ascendancy has not become total. MiFID II focuses on the preconditions of data consolidation, in particular for equity post-trade data, while aiming to leave sufficient room for competition.

The MiFID II regime for equity pre- and post-trade data publication and consolidation is a main part of the MiFID II Review of ESMA and the Commission. A main deficiency under MiFID II is the lack of a CTP. ESMA has provided several suggestions to establish a single CTP under MiFID II. The ESMA Review shows the complexity in setting up a CTP (or multiple CTPs), as well as the controversy in how to do so. The ESMA Review of MiFID II also shows that APAs have not resulted in better equity post-trade data quality as envisioned under MiFID II (a precondition for a reliable CTP). In other words, MiFID II has not been able to achieve the goals of improved equity post-trade data quality and consolidation. The same line of thought is apparent in the Commission’s preliminary assessments. The Commission believes that the creation of a CTP is a key priority. The Commission also explores options to establish a consolidated quote (i.e. consolidated equity pre-trade data). Although supported by several market participants, the creation of a consolidated quote seems to be even more complex than setting up a CTP. Finally, there is Brexit. The ESMA Review suggests that – despite Brexit – there is support among certain data users in setting up an EU27 CTP (in particular where UK data would be included). Political uncertainty asks for modest conclusions at this point in time. The main observation here is that the EU has from MiFID I to MiFID II introduced more rules on equity pre- and post-trade data publication and consolidation. ESMA and the Commission seem willing to take further steps where deemed necessary.