EC launches wide ranging review of MiFID II/MiFIR and investment firms

Dan Barnes

The European Commission (EC) has launched a ‘Review of the regulatory framework for investment firms and market operators’ to capture any perceived changes needed to the Markets in Financial Instruments Directive / Regulation (MiFID II/MiFIR) which took effect in January 2018.

In order to assess the overall functioning of the regime after two years of application, the EC is mandated under MiFID II/MiFIR to present the Parliament and Council with a report on the operation of the new framework, together with a legislative proposal for reform, if deemed necessary.

The consultation launched on 17 February therefore seeks to gather evidence from stakeholders and EU citizens on areas that would merit targeted adjustments. In addition, the Commission says it would welcome indications on how issues should be prioritised in a potential reform of the MiFID II/MiFIR rulebook.

“This will tie-in to Germany taking over the presidency in June 2020,” notes one sell-side commentator, speaking of-the-record. “They are very much focused on understanding how to make financial markets work in the European Union.”

In its report submitted on 5 December 2019 to the Commission, the European Securities and Markets Authority (ESMA) noted that MiFID II/MiFIR has not delivered on its objective to reduce the price of market data and the Reasonable Commercial Basis (RCB) provisions have not delivered on their objectives to enable users to understand market data policies and how the price for market data is set.

ESMA recommended a number of targeted changes to the Level 1 or Level 2 texts to strengthen the overall concept that market data should be charged based on the costs of producing and disseminating the information by:
• Adding a mandate to the Level 1 text empowering ESMA to develop Level 2 measures specifying the content, format and terminology of the RCB information;
• Moving the provision to provide market data on the basis of costs (Article 85 of CDR 2017/565 and Article 7 of CDR 2017/567) to the Level 1 text;
• Adding a requirement in the Level 1 text for trading venues, APAs, SIs and CTPs to share information on the actual costs of producing and disseminating market data as well as on the margins with CAs and ESMA together with an empowerment to develop Level 2 measures specifying the frequency, content and format of such information;
• Deleting Article 86(2) of CDR 2017/565 and Article 8(2) of CDR 2017/567 allowing trading venues, APAs, CTPs and SIs to charge for market data proportionate to the value the data represents to users.

The EC is prioritising feedback on these requirements in its consultation, along with feedback on the development of a consolidated tape for equity and non-equity instruments, investor protection, research and commodity markets.

Secondary concerns include the derivatives trading obligation; multilateral trading systems; the double volume trading cap; non-discriminatory access to clearing systems; digitalisation and foreign exchange trading.

Access to the consultation is vie the EC website here – – and it will be open until 20 April 2020.

©The DESK 2020