Thursday November 9 2017

News Source: Fund Regulation

Focus: Other

Type: General

Country: European Union




On 9th November 2017, European Securities and Markets Authority (ESMA) published a Consultation on amendments to Commission Delegated Regulation (EU) 2017/587 (RTS 1).

Under Article 14(7) of Regulation (EU) No 600/2014 (MiFIR), ESMA received a mandate to develop draft Regulatory Technical Standards (RTS) to specify further, in the context of the quoting obligation for systematic internalisers (SIs), “the determination of whether prices reflect prevailing market conditions”.

ESMA finalised its proposal in September 2015 (ESMA/2015/1464) and this proposal was endorsed and published in the Official Journal of the EU on 31 March 2017 (see Article 10 of RTS 1). Over recent months, it has come to ESMA’s attention that the concept of “prices reflecting prevailing market conditions” may require further clarification.

In particular, there have been discussions whether SIs’ quotes should under certain circumstances reflect the same minimum price increments as orders and quotes submitted to trading venues trading for the same financial instrument. ESMA considers that in order to ensure that SIs’ quotes adequately reflect prevailing market conditions it may be necessary to link them to the minimum tick sizes applicable to trading venues. The consultation paper (CP) explains ESMA’s proposal for amending RTS 1. Stakeholders are invited to provide feedback on this proposal. The input from stakeholders should help ESMA to finalise its amendments to RTS 1.

ESMA proposes to amend Article 10 of RTS 1 as follows:

“The prices published by a systematic internaliser shall reflect prevailing market conditions where they are close in prices to quotes of equivalent sizes for the same financial instrument on the most relevant market in terms of liquidity as determined in accordance with Article 4 for that financial instrument and where the price levels could be traded on a trading venue at the time of publication”.

Article 2(b): “the transaction is part of a portfolio trade which includes five or more different shares”

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