28 July 2021
MIFID – SECONDARY MARKETS
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published the MiFID II/MiFIR Annual Review Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2).
MiFID II and MiFIR shall ensure fairer, safer and more efficient markets and facilitate greater transparency for all participants. New reporting requirements and tests will increase the amount of information available, and reduce the use of dark pools and OTC trading. The rules governing high-frequency-trading will impose a strict set of organisational requirements on investment firms and trading venues, and the provisions regulating the non-discriminatory access to central counterparties (CCPs), trading venues and benchmarks are designed to increase competition.
ESMA proposes to the European Commission to move to stage three of the phase-in for the transparency requirements, for both the average daily number of trades threshold used for the quarterly liquidity assessment of bonds, and for the pre-trade size specific to the instrument threshold for bonds.
ESMA suggests to the European Commission to:
- move to stage three for the average daily number of trades threshold used for the quarterly liquidity assessment of bonds;
- move to stage three for the pre-trade size specific to the instrument threshold for bonds; and
- not to move to stage two for the pre-trade size specific to the instrument threshold for the other non-equity instruments – ESMA considered that the level of completeness and the quality of the data were still insufficient to perform the annual transparency calculations in 2020 for a number of instrument classes and therefore it was considered premature to move to the next stage.
The proposals to move to stage three are expected to improve the currently limited pre- and post-trade transparency available to market participants in the bond market.
Legal basis and next steps
This final report covers the mandate under Article 17 of RTS 2 whereby ESMA is required to analyse whether it is appropriate to move to the following stage of the phase-in for the transparency requirements with regards to (i) the average daily number of trades threshold used for the quarterly liquidity assessment of bonds, and (ii) the trade percentile used for determining the pre-trade size specific to the instrument thresholds for bonds and other non-equity instruments.
In light of the assessment undertaken and the conclusions reached, ESMA has prepared an amended version of the applicable regulatory technical standards as foreseen in RTS 2.
In order for the move to stage three to take effect, the European Commission has to endorse the amended regulatory technical standards. Following such endorsement, they are then subject to a non-objection procedure by the European Parliament and the Council.
Source – ESMA
ESMA publishes the MiFID/MiFIR Annual Review Report on RTS 2:
https://www.esma.europa.eu/pre
Library document – MiFID II MiFIR Annual Report 2021:
https://www.esma.europa.eu/doc