CESR has completed the outstanding parts of its advice to the Commission in the context of the MiFID review. It has now published advice on:
- standardisation and organised platform trading of OTC derivatives: CESR does not have a firm view on the precise measures needed but says higher levels of standardisation and organisation are necessary and that national regulators and ESMA should work in international fora to ensure consistency of measures. It says EU legislation should mandate ESMA to design, implement and oversee a system of targets to encourage increased trading of eligible derivatives on organised trading venues. It says Regulated Markets and MTFs should meet the necessary criteria for organised trading venues but ESMA should establish what conditions might apply to make other venues eligible. Again, it stresses international consistency is important, particularly aligning EU standards with US measures;
- post-trade transparency standards: a working group has suggested a set of standards based on reference data, transaction type standards and other trade flags, and clarifications of post-trade transparency obligations to avoid duplicative publication. CESR says MiFID should clarify which investment firm should publicise a transaction not executed on an RM or MTF. It also suggests amendments to the reporting obligations for transactions made on behalf of a client and chain transactions;
- client categorisation: CESR finds the MiFID regime works well and does not need significant change, but thinks it may be beneficial to clarify what some terms mean when used in describing professional clients and eligible counterparties (ECPs) and to clarify what duties investment firms owe to ECPs; and
- the remaining responses to the Commission’s request for additional information: CESR has provided the factual information the Commission asked for and given further detail on its July advice on transparency in the equity and non-equity markets. The responses also cover the organisation of transaction and position reporting on OTC derivatives and the scope of the transaction reporting obligations. CESR suggests a new position-reporting regime through trade repositories (as the Commission suggests in EMIR) and says MiFID should recognise these vehicles as approved transaction-reporting mechanisms. The advice recommends extending the scope of transaction-reporting obligations to financial instruments admitted to trading only on MTFs and to certain OTC derivatives, which will align MiFID with the revised scope of the Market Abuse Directive. On position limits, CESR recommends that the Commission should focus on analysing whether exchanges/regulators are able to manage positions across the entire life of commodity derivatives market contracts. It also considers whether the reporting obligations should extend to commodity market firms. Although it sees benefits in consistency, it notes various existing alternative reporting methods that MiFID-exempt firms use and the proposals in EMIR, so further provision in MiFID may involve a greater cost than benefit.
CESR has also published feedback papers on some of its consultations and will publish feedback on the three main areas of the current advice shortly.