EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/12.IV.1:12.IV.1 Level 1: equity pre- and post-trade data in a competitive market setting

EU Equity pre- and post-trade transparency regulation (LBF vol. 21) 2021/12.IV.1

12.IV.1 Level 1: equity pre- and post-trade data in a competitive market setting

Documentgegevens:

mr. J.E.C. Gulyás, datum 01-02-2021

Datum: 01-02-2021
Auteur: mr. J.E.C. Gulyás
JCDI: JCDI:ADS266708:1
Vakgebied(en): Financieel recht / Bank- en effectenrecht
Financieel recht / Europees financieel recht
Financiële dienstverlening / Financieel toezicht

Already during the early stages of the ISD-review, limited competition was considered to be one of the main shortcomings of the ISD framework. It became clear that the EU wanted to open up competition in terms of order-execution (not yet with respect to ‘market data’), in particular by abolishing the ISD concentration-rule.1 The competitive market set out for MiFID I implied that fragmentation risks, such as harmed price discovery and the reduced ability to achieve and monitor best execution, could arise. The competitive approach envisioned for MiFID I could result in fragmented liquidity.2

To mitigate the fragmentation risks of MiFID I, the Commission believed that independent data vendors would exploit recent technological advances to provide commercial solutions to the issue of data consolidation.3 In other words, the Commission did not seek regulation to dictate market structures or solutions to ensure interaction between several European trading platforms (bottom-up).4 The European Central Bank (ECB) expressed a similar point of view. The ECB noted that data consolidation ‘first and foremost needed to be pursued by the private sector (…)’.5 The European Parliament and Council agreed.6 The European Parliament and Council both preferred choice in the area of publication services under MiFID I. No establishment of consolidation models was proposed.7 The latter was evident in the final MiFID I text. MiFID I gave choice in terms of publication arrangements, as well as a market-led solution for consolidation.

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See G. Ferrarini and F. Recine, ‘The MiFID and Internalisation’, in G. Ferrarini and E. Wymeersch (Eds.), Investor Protection in Europe, Corporate Law Making: the MiFID and Beyond, Oxford University Press, 2006, p. 241-256.

See, for example, recital 5 MiFID I Implementing Regulation that emphasizes the importance of having a trading overview in case trading is possible on multiple trading platforms (RMs, MTFs, SIs, and so forth).

Commission, Revision of Investment Services Directive, Second Consultation, 2002, p. 3.

A similar view was evident in Commission, Communication from the Commission to the European Parliament and the Council: Upgrading the Investment Services Directive (93/22/EEC), 15 November 2000 (COM(2000)729 final), p. 17; and Commission, Proposal for a Directive of the European Parliament and of the Council: On investment services and regulated markets, 19 November 2002 (COM(2002)625 final), p. 19-22.

ECB, Opinion of the European Central Bank of 12 June 2003 at the request of the Council of the European Union on a proposal for a Directive of the European Parliament and of the Council on investment services and regulated markets, 12 June 2003 (OJ C 144, 20/06/2003, p. 0006 – 0012), point 14.

See recitals 33-35 European Parliament, legislative resolution on the proposal for a European Parliament and Council directive on investment services and regulated markets, 4 September 2003 (P5_TA(2003)0410); and recital 43 Council, Common Position adopted by the Council on 8 December 2003 with a view to the adoption of a Directive of the European Parliament and of the Council on markets in financial instruments, 8 December 2003 (2002/0269 (COD)).

Ibid.