ISDA has commented on the July EP Compromise Texts for the revised Markets in Financial Instruments Directive and Regulation (MiFID and MiFIR). In general, it supports the changes, but does not support:

  • the proposal to delete from MiFIR the reference to the potential for volume omission in post-trade reporting;
  • the proposed new Article 13a of MiFIR that would require all OTC transactions to take place under the Systematic Internalisation rules;
  • the lack of significant changes to the provisions on trading obligations. It wants to see targeted changes that ensure the provisions cover only appropriate transactions; or
  • the proposal to limit access provisions to cash markets.

It also commented on the June Presidency Compromise texts. Its main comments are:

  • the scope of transparency requirements under Article 7 of MiFID should be explicitly linked to contracts that are subject to the derivatives trading obligation;
  • there is a need for a clearer recognition of the importance of Request-For-Quote or voice trading for OTC derivatives markets;
  • it is important to clarify that uncleared OTC derivatives transactions should not be subject to the provisions of Article 17 of MiFIR on systematic internalisation of non-equities instruments;
  • it agrees it is appropriate to limit this to contracts that are subject to the EMIR clearing obligation and which are also sufficiently liquid; and
  • it calls for removal of the proposed ban on Organised Trading Facility (OTF) operators using proprietary capital.

Its final comments, on the texts dated 31 August, welcome many developments and discuss in detail the proposals for dealing with conflicts and duplication between the laws of different jurisdictions. (Source: ISDA Commentary on MiFID 2/MiFIR Compromise Texts)