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The European Securities and Markets Authority (ESMA) has published its first two review reports on the Markets in Financial Instruments Regulation (MiFIR) transparency regime.
The first report reviewed MiFIR implementation for equity instruments and recommended proposals, such as amendments to pre-trade transparency regimes to reduce the use of reference price waivers, and a more clarified scope of the trading obligations for third-country shares.
It also proposed an increase of minimum quoting obligations and an amended methodology for determining standard market sizes, as well as transforming the double volume cap mechanism into a single volume cap by removing the current trading venue threshold of 4 percent.
ESMA’s second report assessed the pre-trade transparency obligations applicable to systematic internalisers in non-equity instruments.
In relation to the qualitative assessment of Article 18, it recommended maintenance of publishing liquid instrument quotes, while removing the requirement for illiquid instruments in order to harmonise quotes publications by systematic internalisers.
Both reports aim to simplify the current transparency regime while also improving its availability based on market participants’ feedback.
Steven Maijoor, chair of ESMA, comments: “The reports shed light on existing limitations to transparency and, at the same time, clearly demonstrate ESMA’s ability to deliver concrete recommendations based on the data following the implementation of MiFIR.”
“The proposals aim to simplify the transparency regime and increase transparency available to market participants. These important reports provide a solid foundation for any review of the MiFIR transparency regime in the future”.
ESMA noted that in light of the current developments concerning COVID-19, it has agreed to extend the consultations and questionnaires on the delivery of MiFID II review reports.
