The European Commission is set to propose that European stock exchanges provide their data on transactions involving shares (or similar financial securities) so that investors can detect the best opportunities, on Thursday 25 November, as part of the review of the MiFIR Regulation (600/2014) governing markets in financial instruments.
Establishing a consolidated tape for this data will increase transparency by providing an overview of, inter alia, the prices and volumes of securities traded in the EU. This will help reduce the costs of imperfect transparency arising from the fragmentation of European markets, the EU institution said in a draft Regulation, a copy of which was made available to EUROPE.
Under the proposal, regulated exchanges and markets in the EU will be required, in exchange for a fee, to transmit real-time data feeds for each category of securities covered (shares, bonds, derivatives) to consolidated tape providers (CTPs). The latter will themselves have to make this data public at a reasonable cost, using harmonised formats. Selected by the European Securities and Markets Authority (ESMA), the CTPs will have to meet the same governance and service quality requirements.
The proposed revision of the MiFIR Regulation also aims to strengthen the level playing field between market infrastructures. In particular, high-frequency traders (investment banks, market makers) will no longer be allowed to pay retail brokers to channel their orders. The ban on ‘payment for order flow’ will help to improve the quality of order execution for retail investors and the transparency of pre-trade execution platforms.
Finally, the proposal will aim to ensure that EU market infrastructures remain internationally competitive.
This legislative text is part of a package aimed at boosting the capital markets union. This includes a review of the rules governing alternative investment funds (see EUROPE 12835/9) and long-term ELTIF funds (see EUROPE 12837/8), as well as the creation of a European Single Access Point (ESAP) (see EUROPE 12836/6).
See the draft MiFIR Regulation: https://bit.ly/3DT3bl0 (Original version in French by Mathieu Bion)