5.VII.1.1 General

ESMA observes that the level of equity pre-trade transparency on RMs and MTFs can be examined in two ways. First, by comparing the equity pre-trade transparency available before and after the application of MiFID II. For this observation, ESMA concludes that – given that MiFID I was limited to shares admitted to trading on an RM (i.e. a narrower scope) – the level of pre-trade transparency has increased following the application of MiFID II.1

Although positive, ESMA is not optimistic about the second way of observing RM/MTF equity pre-trade transparency levels. The second way concerns comparing (a) the volume and number of orders that are subject to real-time equity pre-trade transparency with (b) the equity orders that benefit from a MiFID II RM/MTF waiver. ESMA observes that the trading volume on RMs/MTFs has increased following application of MiFID II, but not enough to compensate the increase in volume executed under the RM/MTF equity pre-trade transparency waivers.2 ESMA also observes growth in frequent batch auctions that, in view of ESMA, publish insufficient pre-trade data. ESMA proposes a stricter regime in order to ensure RMs and MTFs are more equity pre-trade transparent (lit).3

ESMA too discusses the increase of trading on so-called closing auctions. The increase in closing auctions means that more equity pre-trade data is displayed through periodic auctions, rather than, for example, the more traditional continuous order-driven markets.4