13.III.4.2.2 ESMA advice to the Commission

ESMA refined the CESR recommendations during a later stage of the MiFID II drafting process. ESMA said that the CESR recommendations remained valid.1 ESMA also referred to the usage of the ISO-formats for post-trade reports. ESMA suggested additional flags to support NCAs in monitoring to which extent waivers from pre-trade transparency are used.2 ESMA also believed it was useful to include the date and time of publication among the required fields.3 ESMA was more liberal in terms of data protocols compared to CESR. Instead of expressing a preference for one protocol (being the most radical way to harmonise post-trade data messaging), ESMA proposed the use of free, non-proprietary and open standards (protocols). The rationale here was to permit for technology-based competition in the area of protocols.4

ESMA said it was necessary to publish equity post-trade the venue of publication in order to identify the publishing entity (i.e. a so-called Market Identifier Code: MIC).5 ESMA considered the MIC to include the identify of an SI, in contrast to the MiFID I regime. As examined in chapter 12, MiFID I permitted SIs to remove their identify from equity post-trade data reports, provided the SI published aggregated data about the SI’s trading activity in quarterly post-trade report (i.e. delay publication of SI identity). In this situation, MiFID I permitted, by way of exception, the SI to use the general code ‘SI” instead of the venue identification. Investment firms not being an SI were not required to include their identity in MiFID I equity post-trade data.6 ESMA acknowledged that the MiFID I possibility enabled SIs to reduce position risks. However, ESMA also said ‘it is important to provide investors with an overview of liquidity pools in relation to an instrument’.7 In view of ESMA, there was in effect an argument to disclose the SI’s identity in equity post-trade data. ESMA added that the MiFID II equity pre-trade transparency obligations also require SIs to publish their identity in the SI quotes (in relation to liquid equity instruments for which the investment firm is an SI).8 ESMA believed that for these reasons it would be consistent to align the MiFID II equity post-trade transparency requirements with those of the MiFID II equity pre-trade transparency regime in requiring SIs to disclose their identity.9

The Commission adopted some, but not all, proposals of ESMA. This is apparent in the final MiFID II text. MiFID II does not require to include the identity of the SI in the MiFID II equity post-trade data (in contrast to the ESMA proposal). MiFID II therewith emphasizes the position risks of SIs (anonymous post-trade reports), rather than transparency in terms of SI identity disclosure. The Commission did adopt several of the other ESMA proposals about the ISO-standards (format), additional flags, multiple protocols, and adding the date and time of publication. ‘Several’, because the Commission made some small changes.10 The latter is evident in the final MiFID II text. Compared to MiFID I, MiFID II covers more EU rules for the content (including anonymous SIs), formats, flags, free, non-proprietary and open protocols, as well as cancellation and amendment procedures for equity post-trade reports.11