MiFID / MiFIR Review

Embarking on a path of financial evolution, the European Union (EU) consistently fine-tunes its regulatory framework, seeking a balance between simplicity and heightened standards for market participants. The recent regulatory review, unveiled by the European Council in December 2022, stands as a noteworthy milestone. With a primary focus on transparency and reporting requirements, these amendments introduce strategic shifts that significantly impact investment firms and Systematic Internalisers.

Unveiling Key Amendments: Strategic Shifts for Enhanced Efficiency

Amidst these regulatory adjustments, a prominent highlight is the removal of pre-trade transparency for non-equity instruments among Systematic Internalisers. Notably, pre- and post-trade transparency obligations now extend to liquid instruments and concluded derivative contracts. The proposal replaces the existing “TOTV” concept for OTC derivatives, placing emphasis on post-trade transparency.

Streamlining Reporting: The “Designated Publishing Entity”

Introducing a novel approach, the regulatory framework introduces the role of the “Designated Publishing Entity.” This transformative role allows counterparties to centrally register for simplified reporting to the Approved Publication Arrangement (APA) as a one-sided reporting entity.

Navigating Challenges with Consolidated Tape Providers (CTP)

Addressing challenges related to Consolidated Tape Providers (CTP), obstacles such as clarity in market data procurement and insufficient data quality shall be removed. Remedial measures include the mandatory provision rule (All SIs and trading venues must provide market data to the CTPs) and initiatives to enhance data quality by harmonizing reports from trading venues and Systematic Internalisers.

Harmonization and Quality Standards

The compliance of market participants with harmonization and quality standards emerges as pivotal for the success of these regulatory changes. The timely provision of pre and post-trade data will become crucial for CTPs to publish near-real-time market data.