Market Integrity

The European Securities and Markets Authority (ESMA) issues today its Technical Advice to the European Commission (EC) on how to improve the Short-Selling Regulation (SSR). 

In line with the mandate received, ESMA proposes a number of concrete amendments on controversial areas of the SSR to improve its relevance, effectiveness, coherence, and efficiency.

ESMA’s Technical Advice includes proposals around the three main elements of the mandate:

  1. Exemption for market making activities;
    • ESMA proposes including the different types of on-venue market making activities described in MiFID II in the definition of ‘market-making activities’;
    • ESMA considers that market makers should be members or participants of only one of the trading venues where their market-making activity takes place, not of all of them;
    • ESMA proposes not requiring any membership requirement for OTC market-making activity;
    • ESMA suggests introducing reporting obligations for market makers.
  1. Short-term bans on short-selling;
    • ESMA recommends that only the competent authority of the most relevant market should have the capacity to adopt a short-term ban applicable across Europe;
    • ESMA proposes transforming the current bans on short selling into a ban on entering into or increasing net short positions.
  1. Transparency of net short positions;
    • ESMA suggests practical improvements of the current regime including building a centralised notification and publication system across Europe;
    • ESMA supports requiring the LEI for the identification of certain position holders.

The SSR lays down a common regulatory framework with regard to the requirements and powers relating to short selling and credit default swaps (CDS) and ensures greater coordination and consistency between Member States. The SSR aims to enhance transparency, reduce certain risks associated with short selling and uncovered CDS, and ensure a common regulatory approach across Member States. 

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&A) regarding data reporting under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

This document includes updated Q&As on:

  • Unknown date of admission
  • Concept of underlying
  • Non-EU branches of EU Investment firms

The purpose of this document is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR in relation to regulatory data reporting topics. It provides responses to questions posed by the general public and market participants in relation to the practical application of data reporting requirements.

The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices. ESMA will periodically review these Q&As on a regular basis to update them where required and to identify if, in a certain area, there is a need to convert some of the material into ESMA Guidelines and recommendations.

The European Securities and Markets Authority (ESMA) published today the MiFID II/MiFIR transitional transparency calculations (TTC) for equity and bond instruments. Today’s publication means that TTC for all asset classes, applicable from 3 January 2018, are now available to market participants, infrastructures and authorities as required under the new regulatory framework.

The execution of the TTC has been delegated to ESMA by National Competent Authorities (NCAs), who have also approved the final results published today.

Steven Maijoor, Chair, said:

“Today’s publication of the Transitional Transparency Calculations for bonds and equity completes the provision of data needed, by financial market participants and their supervisors, for the implementation of one of the key elements of the MiFID/MiFIR reforms, more transparent securities markets.

“The provision of this data is part of the ambitious programme to provide complete and timely information to facilitate compliance with the requirements of MiFID II/MiFIR and MAR by market participants, and supervisors.

“All market participants in the European Union, and NCAs, now have the final information needed to ensure a smooth transition to meeting their responsibilities under the new regime.”

ESMA, beginning in January 2018, will publish reference data, transparency calculations and double volume cap information on a regular basis. Moreover, the transaction reporting exchange mechanism, that allows information sharing among NCAs, will continue operating with the new regulation.

MiFID II’s implementing measures on transparency for financial instruments require NCAs to compute and publish transparency calculations on financial instruments, including transitional ones prior to the date of application of MiFIR. NCAs from the European Economic Area (EEA), with the exception of Poland, have delegated to ESMA the compilation of TTC. ESMA has already provided TTC for non-equity instruments in July and September 2017.

Transitional Transparency Calculations – Equity & Bond Instruments

The TTC for equity instruments, published today, have been calculated on the basis of the collection, review and compilation of data provided by 133 trading venues located in the EEA. As a result 1,907 equity instruments, out of 28,971, have been found to have a liquid market. ESMA has used the submitted data to provide the trading activity indicators required for the calculation of tick sizes for shares and depository receipts by trading venues and NCAs.

For bonds, except Exchange Traded Commodities and Exchange Traded Notes, ESMA publishes the liquidity assessment for individual instruments. The calculations were performed by ESMA, using data provided by 116 trading venues and the transitional calculations have also incorporated information on OTC markets using information from TRAX. As a result, 566 bond instruments, out of 61,761, have been found to have a liquid market according to the MiFIR criteria.

The TTC includes equity instruments available for trading in September 2017 and bonds available for trading in October 2017. The TTC for instruments listed after these dates will be performed by NCAs and ESMA will publish that information in January 2018.

ESMA has performed these calculations with due care and to the best of its ability. However, given the scope and complexity of the calculations, including the various underlying data sources, future corrections of the TTC cannot be ruled out. ESMA expects to continuously supplement and update the information provided, where necessary.

Next Steps

The TTC will be applicable starting 3 January 2018 and the equity instruments TTC will apply until 31 March 2019 and for bond instruments (liquidity assessment) until 15 May 2018. Further information is available on ESMA’s website.

The European Securities and Markets Authority (ESMA) has updated its Questions & Answers (Q&A) document regarding the implementation of the Market Abuse Regulation (MAR).

The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of MAR and its implementing measures. Today’s Q&As include two new answers on managers’ transactions, addressing in particular trading during “closed periods” by persons discharging managerial responsibilities (PDMRs).

MAR is intended to guarantee the integrity of European financial markets and increase investor confidence. The concept of market abuse typically consists of insider dealing, unlawful disclosure of inside information, and market manipulation.