ESMA has published a final report on its draft Regulatory Technical Standard (RTS) on the trading obligation for derivatives under MiFIR. ESMA’s draft RTS provides the implementing details for on-venue trading of interest rate swaps (IRS) and credit default swaps (CDS).
MiFIR’s trading obligation is closely linked to the clearing obligation under EMIR and will move over-the-counter (OTC) trading in liquid derivatives onto organised venues. 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 mandatorily traded on-venue on a regulated market (RM), multilateral trading facility (MTF), organised trading facility (OTF) or an equivalent third-country trading venue.
ESMA has decided to make the following fixed-to-float IRS and CDS indices (which are deemed sufficiently liquid) subject to on-venue trading:
- fixed-to-float interest rate swaps denominated in EUR;
- fixed-to-float interest rate swaps denominated in USD;
- fixed-to-float interest rate swaps denominated in GBP; and
- index CDS – iTraxx Europe Main and iTraxx Europe Crossover.
ESMA’s draft RTS have been submitted to the European Commission for its endorsement and 3 January 2018 is the envisaged date of application.