Einde inhoudsopgave
EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/13.IV.7.1
13.IV.7.1 Reasons for the overall bottom-up approach
mr. J.E.C. Gulyás, datum 01-02-2021
- Datum
01-02-2021
- Auteur
mr. J.E.C. Gulyás
- JCDI
JCDI:ADS267156:1
- Vakgebied(en)
Financieel recht / Bank- en effectenrecht
Financieel recht / Europees financieel recht
Financiële dienstverlening / Financieel toezicht
Voetnoten
Voetnoten
CESR, Technical Advice in the context of the MiFID Review – Equity Markets, April 2010(10-394), p. 21.
CESR, Technical Advice in the context of the MiFID Review – Equity Markets, April 2010(10-394), p. 21.
Commission, Public Consultation: Review of the Markets in Financial Instruments Directive, 8 December 2010, p. 136.
N. Moloney, EU Financial Markets Regulation, Oxford University Press, Third Edition, 2014, p. 494 and Commission, Public Consultation: Review of the Markets in Financial Instruments Directive, 2010, p. 136. A similar discussion is visible in current MiFID II Review. Reference is made to paragraph VI below.
See, for example, Bolsas y Mercados Españoles (BME), Comments on the Public Consultation CESR/06-551, October 2006, p. 8.
This argument is based on CESR, Public Consultation: Publication and Consolidation of MiFID Market Transparency, October 2006(CESR/06-551), p. 5.
Compared to the MiFID II regime for equity post-trade data, MiFID II provides little intervention in the area of publishing and consolidating equity pre-trade data. The MiFID II approach here is more bottom-up. There are several reasons that explain the MiFID II approach:
The first reason is the focus of the EU on the publication and consolidation of equity post-trade information in drafting MiFID II. Whilst market participants had some concerns in relation to the pre-trade data under MiFID I, the main concerns were in respect concerned equity post-trade data, both in terms of lacking data quality and lack of consolidation.1 The EU therefore focuses mainly on improving equity post-trade data quality and consolidation, rather than equity pre-trade data.2 This is not surprising, given that under MiFID I all investment firms were required to publish equity post-trade data outside RMs and MTFs. By contrast, the MiFID I equity pre-trade transparency regime for SIs and client limit orders was less comprehensive (i.e. less obligations for equity pre-trade data publication outside RMs and MTFs).
The second reason has to do with the technical and cost-aspects of creating a consolidated quote for pre-trade data. The consolidation of pre-trade data, which must be made available under shorter time scales than post-trade data, is generally seen as more technically challenging and costly (i.e. more data to be processed compared to a consolidated tape for post-trade data).3 Hence, a consolidated quote (pre-trade data) was seen as a less pressing policy priority for MiFID II.4
As noted, MiFID II provides limited rules in the context of RMs and MTFs publishing the equity pre-trade data apparent in the RM/MTF system. Examples of limited rules include no mandated MiFID II content and format for equity pre-trade data reports and a general rule (not: specific) to have rules and procedures for ‘fair and orderly trading’ (instead of an explicit data monitoring obligation). The limited regulatory intervention (bottom-up) reflects the aim to prevent RMs and MTFs from making make big and potentially unnecessary investments (compliance costs for implementing harmonized equity pre-trade content and formats),5 as well as the traditional overall high quality (accurate) data of RMs and MTFs publishing equity pre-trade (and post-trade) data (i.e. no specific data monitoring obligation seemed necessary).6