FESE Response to the ESMA third Consultation Package on the MiFIR Review

RTS 1 and CDR 2017/567

As a general remark, we recommend that ESMA reconsider some proposals which represent a missed opportunity to improve the information available to investors in EU equity markets, in line with the Level 1 mandate. For example, to enhance the visibility of EU liquidity, we propose:

• increasing the thresholds for liquidity determination for shares,
• aligning the SMS concept and threshold more closely with the LIS threshold, and using ADT rather than AVT to better capture liquidity and market impact risk.

We find the exemption of SIs from most pre-trade transparency requirements, driven by the combined effect of the liquid market and SMS threshold definitions, to be problematic. Additionally, attention should be given to the growth of trading systems that de facto import execution from other sources with limited pre-trade transparency and are not subject to the waiver.

In our response, we also provide specific suggestions and clarifications on several tables under RTS 1. For example, we recommend retaining granular SI flags for post-trade transparency and adding flags to indicate midpoint transactions and whether the SI is on the buy or sell side.

Furthermore, the staggered application dates for different equity transparency provisions make implementation extremely challenging. We urge ESMA to align timelines wherever possible and ensure a consistent approach, providing sufficient time for implementation.

RTS on input/output data for the Equity CTP

Our response outlines FESE’s recommendations for input/output data, including regulatory data such as the status of individual financial instruments and matching orders, as well as core data such as pre-trade information. Key points include:

• There must be a clear distinction between RTS 1 and RTS 2, as well as the RTS governing the input and output data provided to the CTP.
• Regulatory data requirements for the CTP should be kept to a minimum, focusing solely on information relevant to data users.
• Only the first BBO should be required by the CTP to display the EBBO, in line with Level 1.
• Failing to require the reordering of data messages would present a misleading view of the BBO across European markets.

New ITS, RTS 3, RTS 7

Regarding the new ITS, FESE recommends creating a more robust notification process for SIs. They should at least provide a description of the business model and explain how they maintain regulatory compliance, to ensure a level playing field with Regulated Markets and MTFs.

Regarding RTS 7, FESE supports ESMA’s approach to circuit breakers by adopting most of the provisions from the October 2023 ESMA Supervisory briefing on the same topic.

• FESE supports increasing transparency in the area of circuit breakers, including the changes to MiFID Article 48. However, we propose modifying Recital 19 of the draft RTS to state that trading venues should be able to disclose further parameters to the public if they wish so, at their own discretion.
• FESE does not believe that ESMA should further specify the type of information to be disclosed. We would assume it is at the exchanges’ discretion to decide which information should be provided as per Article 19(1)(f).