Technical summary - MiFIR (Regulation)

The MiFIR Regulation encompasses the rules and guidelines on execution venues, transaction execution as well as pre- and post-trade transparency. The contents of the Regulation are subject to Level 2 and Level 3 measures and will immediately come into force in the EU member states without possibility of national implementation specifics.

MiFIR contains standards and requirements which have an immediate effect on trading platforms and investment firms, their systems as well as their trading processes. A focus is on OTC derivatives and on ensuring pre- and post-trade transparency. Therefore MiFIR directly links to EMIR, which was mainly a post-trading topic, and widens the obligations to the pre-trade area. Also, the range of reportable instruments is significantly broadened.

New trading venue category - OTF

MiFIR and MiFID II introduce a new type of trading venue for bonds, structured finance products, emissions allowances and derivatives. These organised trading facilities (OTF) aim to increase transparency and efficiency of EU financial markets. Every multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling will be considered an OTF under the new requirements.

Transparency requirements

for trading venues:

  • Pre-trading transparency: Indication of quotes and depth of trading offers
  • Post-trading transparency: Display of traded quotes and volume near time
  • Publication of the data to the public within 15 minutes
  • Stricter exception regime

for investment firms:

  • Publication of offers
  • Publication of trade details through an Approved Publication Arrangement
  • Obligation to report data to national competent authorities allowing the determination of the pre- and post-trade transparency
  • Trading obligation to regulated market or trading venues

Transaction reporting

  • Record keeping of trade transactions for operators and users of MTFs and OTFs
  • Reporting obligation of conducted trade transactions including trade decision information to the national competent authorities for operators of MTFs, OTFs and investment firms

Derivatives trading

  • Trading obligation on organised trading venues, MTFs or OTFs
  • Stricter clearing obligation for derivatives traded on regulated markets
  • Exemption for portfolio compression transactions

Non-discriminatory clearing access

  • Access to CCPs for trading venues
  • Access to trading venues for CCPs

Supervision

  • Market monitoring by ESMA and national competent authorities
  • Product intervention power by competent authorities
  • Position limitation power by ESMA
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