Consultation on CESR's advice in the context of the MiFID Review: Non-equity markets transparency

The Markets in Financial Instruments Directive (MiFID) came into force on 1 November 2007. It introduced significant changes to the European regulatory framework for equity secondary markets, leaving open to Member States the possibility to extend transparency requirements to financial instruments other than shares according to Recital 46.

CESR has analysed the eventual extension of MiFID transparency requirements to non-equity financial instruments in CESR's response to the Commission on non-equities transparency (Ref. CESR/07-284b) in August 2007 and CESR's report on transparency of corporate bond, structured finance products and credit derivatives markets (Ref. CESR/09-348) as of July 2009.

CESR concluded in CESR/07-284b that at the time there was no evident market failure in respect of market transparency on corporate bond markets and that there was no need of a mandatory pre or post-trade transparency regime. When CESR re-examined the need for additional transparency in the wake of the financial crisis in CESR/09-348, it focused solely on post-trade transparency. In this report CESR concluded that additional post-trade information would be beneficial to the market.

This consultation paper presents possible ways of developing the recommendations in the July 2009 report in the context of the upcoming MiFID Review to be launched by the European Commission in the course of 2010. Since derivatives were not analysed in the past, CESR is also exploring the possibility of a post-trade transparency regime for the most significant subset of these financial instruments: interest rate derivatives, equity derivatives, foreign exchange derivatives and commodity derivatives.

At the request of the European Commission, CESR is also reconsidering whether there is a need for pre-trade transparency for corporate bonds, ABS, CDOs, CDS and the derivatives mentioned above.