5.IV.1.4.3 Alignment with the RM/MTF large in scale-waiver

One exception of the client limit order display rule, being the possibility for NCAs to waive obligation in case of ‘large in scale orders’, stems from MiFID I. As examined in chapter 4, the Commission suggested the exception under MiFID I where the unexecuted order was large in scale (or where requested by the client). The Commission proposed to align the large in scale-waiver for the client limit order display-rule and the pre-trade transparency waiver for RMs and MTFs.1 This reflected the aim to ensure simplicity in terms of (i) the RM and MTF large in scale-waiver and (ii) the large in scale exception of the client limit order display rule. The rationale behind the Commission’s proposal was that requiring client limit orders to be displayed could deter market participants from trading. The exception of a ‘large in scale order’ (and client instructions) could prevent this from happening.2

While the European Parliament disagreed with the Commission – i.e. the European Parliament believed that a single ‘large in scale threshold’ across the EU was impossible given the diversity of the European markets (even through Level 2)3 – the Council agreed with aligning the ‘large in scale’-exception with the RM/MTF large in scale-waiver.4 The position of the Council was evident in the final MiFID I text. MiFID I aligned (a) the ‘large in scale’-exception of the client limit order display rule with (b) the RM/MTF large in scale-waiver.5 A similar position is in place under MiFID II. Similar to the Commission’s MiFID I Proposal, the alignment of ‘large in scale orders’ under the MiFID II reflects the aim of having simplicity (i.e. a similar approach for the RM/MTF large in scale-waiver and client limit order-display rule).