The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is postponing the annual review of the regulatory technical standards – RTS 2 – on non-equity transparency. The decision was taken because the on-going MiFIR review is likely to have a significant impact on the instruments subject to this report.
RTS 2 requires that ESMA performs an annual review by 30 July, assessing whether it is appropriate to move to the next stage of the phase-in for the liquidity determination of bonds, and the trade percentiles determining the pre-trade sizes specific to the financial instrument (SSTI) threshold for bonds and derivatives.
ESMA decided not to perform this year’s annual report, which would have been the third report, given that the on-going MiFIR review is likely to make part of the review redundant due to the proposed removal of the SSTI threshold, and might impact other provisions related to the instruments subject to this report.
Moreover, since the previous step of the phase-in is still being implemented, it would not be possible to assess the impact of moving to the next stage based on transaction data.
ESMA delivered the MiFID II/MiFIR Annual RTS 2 Review in 2020 and 2021 suggesting the following:
- to move to the next stage for the criterion 'average daily number of trades' used for the quarterly liquidity assessment of bonds;
- to move to the next stage for the trade percentiles that determine the pre-trade SSTI for bonds; and
- not to move to the next stage for the trade percentiles that determine the pre-trade SSTI for other non-equity financial instruments.
The amendment of RTS 2 suggested by ESMA in 2020 (move to stage 2) is in force. The following amended RTS 2 submitted in July 2021 for the move to stage 3 for bonds has been adopted by the European Commission in January 2022 and is currently subject to scrutiny by co-legislators.
ESMA will resume the submission of the annual RTS 2 report in 2023.
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