What’s next for securities markets in Europe?


On 15 January, European legislators reached an agreement on the review of the Markets in Financial Instruments Regulation and Directive (MiFIR/MiFID II).  The reviewed framework will increase competition and forms also part of the EU’s commitment to decrease systemic risk in the over-the-counter derivatives market. It represents an essential element to ensure and “establish a safer, more open and more responsible financial system and restoring investor confidence in the wake of the financial crisis” said Commissioner Barnier.

The MiFID II reform intends to shift Over-the-Counter trading to multilateral and better regulated trading platforms. It will notably consist of enhanced transparency rules aimed at avoiding that dark trading of shares and other equity instruments. For equities, a double volume cap mechanism limits the use of reference price waivers and negotiated price waivers (4% per venue cap and 8% global cap) together with a requirement for price improvement. The EBF is concerned that the proposed volume cap mechanism may negatively impact the attractiveness of the European equities markets.

The Directive establishes a new type of trading venue: the organised trading facility (OTF) to capture non-equity trading. Those OTFs will have to fulfil transparency, non-discriminatory access, surveillance capability and business conduct requirements.

The final text must now be translated into all EU languages before facing a final vote among all MEPs. The European Securities and Markets Authority (ESMA) will then develop the legislation more in details and determine how it will be implemented in practice.

An ESMA high level discussion paper should be followed by a set of draft technical standards based on the market feedback received.


EBF contact: s.merinorueda@ebf-fbe.eu