The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published the Final Report on the MiFID II/MiFIR transparency regime applicable to non-equity financial instruments. The proposals contained in the report aim at simplifying and bringing more efficiency to an overly complex regime and fostering harmonised application across the EU.
ESMA concluded, following its Consultation Paper on MiFIR Review Report on transparency for non-equity, that the regime was too complicated and not always effective in ensuring transparency for market participants. In consequence, it makes several proposals to the European Commission to improve the current regime.
The main recommendations are:
- deleting the specific waiver and deferral for respectively orders and transactions above the “size-specific to the instrument” threshold;
- streamlining the deferral regime with both a simplified system based on volume masking and full publication after two weeks as well as removing the supplementary deferral options left to National Competent Authorities (NCAs) under the current MiFIR text;
- transforming the possibility granted to NCAs to temporarily suspend MiFIR transparency provisions into a mechanism coordinated at EU-level;
- including the possibility to suspend on short notice the application of the derivative trading obligation similarly to the mechanism available in EMIR; and
- complementing the criteria used to grant equivalence to third-country trading venues for the purpose of the derivative trading obligation with conditions relating to transparency and non-discriminatory access.
These recommendations are part of a wider effort by ESMA to bring more transparency into the derivative and bond markets notably through the adoption of guidance, the promotion of more convergent supervision or the inclusion of targeted amendments to the delegated Regulation within the ESMA remit. ESMA intends to pursue those efforts in the future and continues to align market practices with the objectives of MiFIR.
ESMA invites the European Commission to translate these recommendations into legislative proposals. For the recommendations that require Level 2 changes, ESMA intends to publish amendments to the ESMA RTS 1 and RTS 2 in due course.