ESMA consults on draft standards for trading obligation for derivatives under MiFIR
The European Securities and Markets Authority (ESMA) recently published a consultation paper regarding its draft technical standards specifying the trading obligation for derivatives under the Markets in Financial Instruments Regulation (MiFIR).
MiFIR’s trading obligation will move over-the-counter (OTC) trading in liquid derivatives onto organised venues thus increasing market transparency and integrity alike. MiFIR, which implements parts of the MiFID II framework, outlines the process for determining which derivatives should be traded on-venue.
ESMA invites stakeholders to provide feedback on ESMA’s approach, which was revised following an earlier consultation in 2016. Key elements of the recently published consultation include:
- liquidity analysis for interest rate derivatives and Index CDS based on a dataset covering the second half of 2016, incl. the proposal on which derivatives should be made subject to the trading obligation;
- the proposal on how to phase-in the trading obligation for derivatives
- ESMA’s approach concerning the instrument register to be maintained by ESMA for the trading obligation; and
- a high-level cost-benefit-analysis.
The consultation is open for comments until 31 July 2017. ESMA will use the feedback received to finalise its draft RTS on the trading obligation. The submission of supportive data would be particularly appreciated. ESMA will send the final draft standards to the European Commission for endorsement.
The trading obligation for derivatives under MiFIR is closely linked to the clearing obligation under the European Market Infrastructure Regulation (EMIR). Once a class of derivatives needs to be centrally cleared under EMIR, ESMA must determine whether these derivatives (or a subset of them) should be traded on-venue, meaning on a regulated market (RM), multilateral trading facility (MTF), organised trading facility (OTF) or an equivalent third-country trading venue.
MiFIR foresees two tests to determine the trading obligation: The venue test (a class of derivatives must be admitted to trading or traded on at least one admissible trading venue) and the liquidity test (whether a derivative is ‘sufficiently liquid’ and there is sufficient third-party buying and selling interest).
Latest News from
Change of EUIPO bank account19/02/2018 16:15:00
As from 17 February 2018, one of the two bank accounts used by EUIPO to which users may transfer fees, current account replenishments and charges will change.
Lessons learned from austerity make a change of policy mandatory19/02/2018 15:26:00
The EESC presents measures to avoid the severity of austerity in the future and to mitigate the negative effects of previous crisis management
Mergers: Commission opens in-depth investigation into proposed merger between Praxair and Linde19/02/2018 14:15:00
The EC has opened an in-depth investigation to assess the proposed merger between Praxair and Linde under the EU Merger Regulation. The EC is concerned that the merger may reduce competition in the supply of several crucial gases, like oxygen & helium.
European Defence Fund delivers new pan-European research projects19/02/2018 13:10:00
The European Defence Fund continues to deliver with another set of EU-funded defence research projects. The Fund, launched by President Juncker in June 2017, is a catalyst for the creation of a strong EU defence industry. It boosts defence capabilities and builds new partnerships across borders.