With hindsight, last year’s discussion about the differences in defining direct electronic access (DEA) under MiFID II and RegAT may have been somewhat premature. Firstly, with the change in both the US administration and the CFTC leadership it is now uncertain how RegAT will be progressed. Secondly, over the last few months it’s become clear that we can’t even agree within the EU what DEA means. The European debate largely revolves around Article 20 and how the “discretion regarding the exact fraction of a second” could be interpreted consistently with the exemption of online brokerages in Recital 25.

Some in the industry have concluded that they do not offer DEA at all – Eurex amongst them, based on their particular interpretation of the definition (see slide 17). However, others might take a less technical interpretation and conclude that nearly everything but high-touch flow could be in scope.

The fast approaching MiFID II go-live date means that market participants might need to prepare for a world where their clients and business partners have different interpretations of the rules. One of the overall aims of MiFID II is to harmonise European markets, but the way forward is fast becoming a road of negotiation, flexibility and agreeing to disagree.