On August 31, the European Securities and Markets Authority (ESMA) published a consultation paper (the “CP”) on the final remaining draft implementing technical standards (ITS) under the Markets in Financial Instruments Directive (MiFID) II and the Markets in Financial Instruments Regulation. In the CP, ESMA is consulting on:
- The suspension and removal of financial instruments from trading on a trading venue. MiFID II empowers a market operator to suspend or remove from trading financial instruments that no longer comply with the rules of an EU-regulated market, unless such a step would be likely to cause significant damage to investors’ interests or the orderly functioning of the market. The national EU regulator in the country where the suspension or removal originated has to decide whether one of the three reasons to extend the suspension process (suspected market abuse, a takeover bid or the non-disclosure of inside information about the issuer or financial instrument in breach of the EU Market Abuse Regulation) to other regulated markets, multilateral trading facilities, organized trading facilities or systematic internalisers in its jurisdiction, applies. If the regulator concludes that none of the three reasons apply, the regulator is not required to expand the suspension or removal, and to communicate its decision to ESMA and the competent authorities of the other EU member states.
- The notification and provision of information for DRSPs. MiFID II mandates that the ITS should cover the notification and provision of information by a data reporting services provider (DRSP) applicant when applying to be authorized, and in relation to subsequent changes to its management body. In drafting the ITS, ESMA has given consideration to the already drafted ITS relating to applications to become authorized as an investment firm. In ESMA’s view, there are strong similarities between the procedure for applying to be authorized, the information to be provided and the notifications that must be made under the two provisions. ESMA has, therefore, sought to align the two sets of draft ITS to the greatest extent possible.
- The weekly aggregated position reports for commodity derivatives, emission allowances and derivatives thereof. To achieve transparency and support the monitoring of new position limits prescribed by MiFID II, daily and weekly reports are required. For the daily position reports, members and participants of trading venues will be required to report to the trading venue a complete breakdown of their positions in commodity derivatives, emission allowances and derivatives of emission allowances, as well as those of their clients, their clients’ clients and so on down to the end user. For the weekly position reports, trading venues will have to publish a report of the aggregate positions in commodity derivatives, emission allowances and derivatives of emission allowances on that trading venue.
ESMA’s consultation closes on October 31, and it is anticipated that ESMA will send the final report to the European Commission by January 3, 2016—giving a full year before the ITS come into effect with the rest of MiFID II on January 3, 2017.
The CP is supplementary to ESMA’s June 2015 final report on draft ITS and draft regulatory technical standards (RTS) relating to authorization, passporting, registration of third country firms and cooperation between EU regulators. The European Commission’s position on the final rules (both ITS and RTS) are anticipated during the next four to six weeks.
The CP is available here.
The form to reply to the Consultation is available here.
ESMA’s press release on the CP is available here.