Lynn Strongin Dodds
In a widely anticipated move, the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has extended the consultation period for the MiFID II review until 14 June 2020 from 17 May due to the impact of COVID 19.
ESMA launched the consultation on the grounds that the overall levels of transparency remained limited due to so many financial instruments benefiting from exemptions. Some firms have also complained the emergence of new trading venues under MiFID II has taken liquidity away from the primary markets and reduced overall price transparency. Market data has been another hot topic after the EU watchdog found in a December 2019 report on the subject that the regulation “did not deliver on its objective to reduce the price of market data and the Reasonable Commercial Basis provisions have not delivered on their objectives to enable users to understand market data policies and how the price for market data is set”.
The consultation on the review, which was launched in February, covered three areas: the efficacy of the reforms, specifically whether they have succeeded in increasing transparency and levelling the playing field between different types of trading venues; changes to the laws to force a reduction in the price of market data; and a European consolidated tape. The tape, which would replicate the single price record in the US, has been debated for years but was not introduced as part of the Mifid II reforms in January 2018.
The consultation did not include the possibility of introducing open access provisions, one of the original tenets of MiFID II that has become less of a priority in recent years.
In its original statement, the European Commission said: “To assess the overall functioning of the regime after two years of application, MiFID II/MIFIR require that the Commission presents the Parliament and Council with a report on the operation of the new framework, together with a legislative proposal for reform, if deemed necessary.”
The Commission continued: “This consultation therefore seeks to gather evidence from stakeholders, and more generally from EU citizens, on areas that would merit targeted adjustments. In addition, the Commission would welcome indications on how issues should be prioritised in a potential reform of the MiFID II/MIFIR.”