9.VI Conclusion about MiFID II

Similar to MiFID I, MiFID II permits trading platforms to engage in competition in terms of order execution. Nonetheless, MiFID II introduces EU regulation that makes MiFID II stricter than MiFID I. In addition to introducing a share trading-obligation, the MiFID II equity post-trade transparency regime applies to a wider range of instruments, the rules are laid down in detailed maximum harmonised regulations (MiFIR and delegated regulations), equity post-trade needs to be published faster, and ESMA has now a monitoring and binding mediation role in the deferral arrangement process. These top-down elements of MiFID II are in place to increase the level of post-trade transparency compared to MiFID I. In doing so, the MiFID II equity post-trade transparency regime is not about providing maximum equity post-trade transparency, but the right amount of transparency that contributes to liquidity, investor protection, and a level playing field.1MiFID II still leaves flexibility for national divergences, in particular by permitting NCAs to authorize deferral arrangements. The risks inherent in different deferral are likely mitigated, however, through the detailed MiFID II provisions governing the deferral process.2

The results of the MiFID II equity post-trade transparency regime are overall positive,3 in particular compared to the MiFID II equity pre-trade transparency regime. ESMA observes that a large part of share and depositary receipt trading takes place without deferral (i.e. real-time post-trade publication). The issues that ESMA identifies are the large in scale-size for ETFs and the lack of granularity in flags for post-trade share transactions not subject to the share trading-obligation. ESMA has asked for input on the speed requirement of real-time post-trade publication, but has not identified any problems in that context.

The positive results can mainly be attributed to the extension in scope of MiFID II compared to MiFID I in terms of financial instruments and the relative simplicity of the MiFID II equity post-trade transparency regime.

Almost similar rules apply to RMs, MTFs, and investment firms operating outside such venues, which is beneficial in terms of a level playing field. Also from a conceptual level equity post-trade transparency is simpler compared to equity pre-trade transparency. Before a takes place (pre-trade) there are a lot of trading possibilities (e.g. negotiation, reference pricing, efficient order management, and so forth), whilst a completed trade (post-trade) is simply executed. The regulatory questions for equity post-trade data are consequently relatively easy, simply put: real-time publication or deferral. The same is not true for equity pre-trade transparency. This thought is also reflected in the MiFID II equity post-trade transparency regime. The EU has introduced a relatively straightforward equity post-trade transparency regime with MiFID II. The current EU priority is equity pre-trade, not equity post-trade transparency regulation.4