5.V.1.4.1 MiFID I review

Under MiFID I approximately 30-40 procent of all equity trades took place outside RMs and MTFs.1 The situation raised concerns about all sorts of regulatory objectives, such as price formation and the level playing field. As a response, the European Parliament considered it appropriate to ensure that as ‘much trading as possible’ would take place in ‘organised systems to which appropriate transparency requirements apply while ensuring that large in scale and irregular transactions can be concluded’.2 No trading obligation was proposed at this point.3 During the subsequent legislative process, the Council took it a step further then the European Parliament. The Council suggested a trading obligation for shares admitted to trading on an RM or traded on a trading venue for investment firms.4 Save for exceptions, the Council proposed to require investment firms to undertake all trades in such shares on an RM, MTF or SI.5 At a later stage, equivalent third-country trading venues were also added as eligible venues for the trading obligation. The possibility to include equivalent third-country trading venues within share trading obligation scope reflects the global nature of share transactions.

The foregoing is apparent in the final MiFID II text. MiFID II (MiFIR) covers a share trading-obligation with the aim to reduce trading taking place outside regulated venues compared to MiFID I. The MiFID II share trading obligation leaves room for competition by permitting a wide range of venues to be eligible for the obligation, namely RMs, MTFs, SIs or third-country trading venues.