9.III.2.2 Conditions

The MiFID II deferral conditions for investment firms trading outside an RM or MTF is the same as for RM and MTFs.1 A difference is the deferral process. Where NCAs provide for deferred publication for certain categories of equity transactions on an RM or MTF, that possibility shall also apply to those transactions when undertaken by an investment firm trading outside an RM/MTF.2 New under MiFID II is the explicit reference to MTFs. MiFID I (in my view unintentionally) referred only to the situation where RMs (not: MTFs) had authorized deferral arrangements.3MiFID II corrects the MiFID I text. MiFID II makes clear that an investment firms can use deferred publication arrangements for certain categories of equity transactions that have been authorized by an NCA for an RM or MTF.4 This seems like a fair correction, given that RMs and MTFs represent the same organized trading functionality.5

Similar to MiFID I, MiFID II does not have an explicit provision where the investment firm operating outside the RM/MTF wants to request deferral where the RM/MTF has not requested deferral for the equity instrument or class of equity instruments.6 It is my understanding that – similar as under MiFID I – the investment firm can in this situation still use deferral arrangements, as long as the investment firm has permission from the NCA to do so. A different reading (i) would harm the level playing field between RMs/MTFs and investment firms operating outside RMs/MTFs and (ii) could damage innovation with respect to deferral arrangements (i.e. no innovation from investment firms outside RMs/MTFs).7

Finally, MiFID II introduces a provision that concerns the NCA responsible for authorizing the deferral arrangements. MiFID II notes that where a transaction is between two investment firms operating outside (the rules of) an RM or MTF, the NCA determining the applicable deferral regime shall be the NCA of the investment firm responsible for making the trade public through an APA.8