5.II.2 Equity pre-trade transparency waivers (dark pools)

MiFID II encompasses the same equity pre-trade transparency waivers as under MiFID I (dark pools).1 NCAs can still grant RMs and MTFs (1) the reference price waiver; (2) the negotiated trade waiver; (3) the order management facility waiver; and (4) the large in scale waiver. Similar to MiFID I, the MiFID II waivers apply to each trading system (e.g. continuous order-driven, quote-driven, periodic auction, and so forth). However, under MiFID II adjustments have been made in order to reduce the amount of dark pools compared to MiFID I. First, MiFID II introduces a so-called ‘double volume cap mechanism’. The double volume cap mechanism limits the use of the (a) reference price waiver and (b) one element of the negotiated trade waiver. Second, many of the waivers have been adjusted to limit further dark trading under the waivers. A shift is apparent from a principle-based (MiFID I) to a rule-based waiver regime (MiFID II). The MiFID II waivers are examined below.