Esma today publishes a revision of its waiver document (ESMA/2011/241) which provides information on the pre-trade transparency of trading systems already set up in the European Union and informs on the compliance of such systems with MiFID, the Markets in Financial Instruments Directive.
Pre-trade transparency is an integral feature of MiFID. However, in order to ensure the liquidity and efficiency of equity markets, waivers allow in a limited number of cases to deviate from MiFID's trade transparency requirements. ESMA compiles its waiver document in order to contribute to a level-playing field across the Union when it comes to the consistent application of such waivers.
ESMA list now includes majority of EU regulated markets and MTFs
Today's update expands the scope of the document to pre-existing systems; it now includes the vast majority of EU operating systems and functionalities where an order which is sent to a Regulated Market (RM) or a Multilateral Trading Facility (MTF) is not subject to any pre-trade transparency, even where such a situation was not supported by an explicit waiver. ESMA's document provides the most complete overview available to date of limitations to pre-trade transparency in Europe, and is an essential element for understanding these functionalities and achieving supervisory convergence.
In 2009, ESMA's predecessor, CESR, developed an internal process where a national regulator brings the arrangements for pre-trade transparency waivers sought by operators of RMs or MTFs to a consideration at EU level. So far, the functionalities analysed under that process were published and summarised in ESMA's waiver document by providing a description of the core elements of each functionality, and ESMA's opinion in terms of MiFID-compliance. Assessing waivers at EU level ensures to increase consistency across different markets.
19 functionalities now included
A total of 19 additional functionalities are now covered. However, not all revised pre-existing cases of limited pre-trade transparency were considered by ESMA as MiFID-compliant. In particular, two preexisting functionalities were added to the list as 'non-MiFID compliant' systems. ESMA expects a timely adjustment of these non-MiFID compliant systems in order to ensure future compliance. ESMA will monitor such adjustments on an on-going basis and also continue to assess the compliance of new waivers in the future.
In addition, the document includes a new entry about a proposal for a reference price system considered as non-MiFID compliant (i.e. not being an operating functionality). ESMA will continue to regularly update this document.