3.III.2.2 CESR standards for ATSs

CESR provided standards for ATSs a few years after the FESCO standards. CESR provided no standards for order internalising systems. CESR noted that market integrity could be enhanced where those wishing to trade can ‘maximise their knowledge of current bids and offers (…) across as wide a range of facilities trading an instrument (…)’.1 CESR provided pre-trade transparency requirements for investment firms that (a) qualified as a ‘qualifying system’and (b) provided trading in a financial instrument admitted to trading on an RM. The definition of qualifying systems was almost identical to the MTF-definition introduced under MiFID I.2

CESR noted that investment firms with qualifying systems needed to make public: (1) information about quotes and/or orders that the qualifying system displays or advertises to the system users (2) on a reasonable commercial basis.3 CESR noted that the pre-trade transparency requirements applicable for RMs in the respective Member State would serve as the benchmark for the pre-trade transparency obligations for qualifying systems (ATSs).4 As general rule, the pre-trade transparency requirements only applied to financial instruments admitted to trading on an RM. However, where a financial instrument was not admitted to trading on any RM, CESR still encouraged the Member States ‘to move towards an adequate minimum level of transparency’ for investment firms with qualifying systems.5

The foregoing indicates that the CESR guidance was broad. CESR did not lay down specific pre-trade transparency obligations for investment firms with qualifying systems. Basic principles were laid down, but the details were the domain of national regulation. Neither were the CESR standards formally binding,6nor did they cover order internalising systems. As a consequence, the CESR approach for pre-trade transparency obligations for investment firms was overall bottom-up.