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ESMA updates Q&As on MiFID II transparency and market structure topics

The European Securities and Markets Authority (ESMA) has updated two Questions and Answers (Q&A) documents on implementation issues relating to transparency and market structure topics under the revised Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

Transparency Q&A: Systematic Internalisers

MiFID II/ MiFIR extends the Systematic Internaliser (SI) regime to other equity-like instruments, in addition to shares, and to non-equity instruments. It also introduces the requirement for investment firms to perform a quantitative calculation to assess whether they are of a size which requires them to be an SI.  

The Q&A includes four new questions and answers which clarify issues on the new SI regime, including;

  • the level at which the firm must perform the calculation where it is part of a group or operates EU branches;
  • which transactions should be exempted from, and included in, the calculation;
  • at which level of asset class the calculation should be performed for derivatives, bonds and structured finance products; and
  • how SIs in non-equity instruments can comply with some of their quoting obligations.

Market Structures Q&A

ESMA has also updated its Q&A document on market structures with three new questions. The questions clarify when a Multilateral Trading Facility (MTF) operator can also be a member of its own MTF, that trading venues locating electronic systems on a third party data centre must comply with the co-location provisions, and how the reference to market makers should be understood under Article 2(1)(d) of MiFID II, which provides an exemption, under very specific conditions, from the obligation to be authorised as an investment firm.

Future work

MiFID II/ MiFIR applies from 3 January 2018 and the purpose of this Q&A is to promote common supervisory approaches and practices in the application of MiFID II/MiFIR and its implementing measures. ESMA will continue to develop these Q&As in the coming months, both adding questions and answers to the topics already covered and introducing new sections not yet addressed.