19.IV.2 Unsuccessful areas

There are also many areas in which the increase in EU equity pre- and post-trade transparency regulation has not been successful. These areas can be divided in three categories, namely: (i) too limited EU intervention, (ii) inadequate design of the rules, and (iii) a too complex regime.

First, despite the increase of EU equity pre- and post-trade transparency regulation, the EU intervention was in hindsight too limited. Main examples of too limited EU intervention include: (a) the scope of financial instruments (only shares admitted to trading under MiFID I); (b) minimum harmonised transparency rules (ISD, but also under MiFID I); (c) the reliance on market forces to achieve a consolidated tape (including too limited intervention for APA data quality) and (d) reliance on market forces to ensure reasonable equity pre- and post-trade data prices within certain EU boundaries. ESMA also believes that further intervention should be considered in the area of (e) RM/MTF waivers and (f) SI equity pre-trade transparency rules, the latter due to the growth of SIs under MiFID II.

Second, there was an inadequate design of the EU equity pre- and post-trade transparency rules. Design issues concern (1) the SI-definition under MiFID I, (2) principle-based rules (waivers under MiFID I and data prices under MiFID II, including the term ‘reasonable margin’), (3) no distinct regime for broker crossing networks under MiFID I, (4) the unclear MiFID II share trading-obligation (in terms of third-country shares and exemptions). ESMA also believes that there is currently (5) no appropriate MiFID II design for frequent batch auctions.

Third, and finally, the increase of EU equity pre- and post-trade regulation resulted in a highly complex regime. Market participants, NCAs, and ESMA are required to comply with a wide set of detailed and technical rules. Particular complexities of the increase of EU equity pre- and post-trade transparency regulation concern the operational nature of data collection, calculation, and publication (e.g. double volume cap and ESMA databases). Another complexity is that the increase in EU equity pre- and post-trade transparency regulation has the result of intervening with other areas of EU law, most notably competition law and intellectual property law (equity pre- and post-trade data prices).