The Member States’ ambassadors to the EU (Coreper) agreed, on Tuesday 20 December, on their negotiating position on the proposal for a regulation to revise the Markets in Financial Instruments Regulation (MiFIR) and the Markets in Financial Instruments Directive (MiFID).
They remained close to the European Commission’s proposal presented in November 2021 (see EUROPE 12840/6).
“The MiFIR review is an important step to strengthen market transparency”, Zbyněk Stanjura, the Czech Minister for Finance, whose country holds the EU Council Presidency, said in a statement. “It will empower in particular smaller investors, giving them easier access to the necessary data to invest in shares or bonds”, he added.
The draft regulation aims to establish a centralised database or ‘consolidated tape’ which will provide access to market data from trading venues as well as systematic internalisers and approved publication arrangements across the EU in a consolidated manner.
“This will improve the overall price transparency across trading venues and will provide investors with easier access to trading data”, he said.
The text ensures that the data on the platform is reliable and provided in close-to-real time. It is specified that information on executed trades and the best available bids and offers at the time of the trade in question are published, as well as the best European bids and offers available at the time of the trade from the most competitive markets.
The draft regulation also introduces a restriction of payments for routing client orders, but Member States will be able to allow this.
In addition, the draft regulation clarifies the limitation of ‘dark trading’ by lifting the complexity and burden of the system. Currently, the volume of dark trading is capped at 4% of the total trading volume on an individual market and 8% on an equity instrument. The draft provides for a new single volume cap of 10%.
The text proposes deferral times depending on the size and liquidity profile of transactions in bonds, structured products and emission allowances, to ensure an adequate level of transparency. These deferrals should be based on the liquidity of a bond, a structured finance product and an emission allowance, as well as on the size of the transactions.
Finally, liquidity providers in bonds, masking price and volume for very large trades should in no case exceed 4 weeks. For OTC derivatives, the duration of deferrals should be calibrated based on a more flexible basis, as only adequate market data can determine the suitability of each period. ESMA will determine the duration of these deferrals.
For its part, the European Parliament has yet to adopt a position (see EUROPE 13065/20). (Original version in French by Anne Damiani)