On April 13, the Committee of European Securities Regulators (CESR) published three consultation papers on its technical advice to the European Commission for the Commission’s review of the Markets in Financial Instruments Directive (MiFID). The Commission will be conducting a review to assess the effectiveness of MiFID throughout 2010.  

The CESR consultation paper on transaction reporting focuses on the following key areas:

  • the introduction of a third trading capacity (riskless principal);
  • the collection of client and meaningful counterparty identifiers;
  • standards for client and counterparty identifiers;
  • client ID collection when orders are transmitted for execution; and
  • transaction reporting by market members that are not authorized as investment firms (for example, members of a regulated market or multi-lateral trading facilities (MTF)).  

The main points of the investor protection consultation include:

  • requirements relating to the recording of telephone conversations and electronic communications—CESR is considering a pan-European regime for recording all transaction orders received or transmitted over the telephone or through electronic communications; and
  • execution quality date—CESR is also considering whether regulatory intervention is necessary to ensure that the necessary information is available in the market to select appropriate execution venues.

The equity markets consultation paper follows on from CESR’s other work in this area including its focus on dark pools. The main topics covered in the paper include:

  • pre-trade and post-trade transparency regimes for regulated markets and MTFs;
  • the definition of and obligations for systematic internalizers;
  • application of transparency obligations to equity-like instruments;
  • regulatory framework for consolidation and cost of market data; and
  • regulatory boundaries and requirements.

The comment period for each of the three consultation papers ends on May 31.

To read the consultation paper on transaction reporting, click here.

To read the consultation paper on investor protection, click here.

To read the consultation paper on equity markets, click here.