Thursday April 6 2017

News Source: Global Exchanges

Focus: Trading Rules

Type: General




The European Securities and Markets Authority (ESMA) has issued the final report on the Guidelines regarding the calibration of circuit breakers and the publication of the trading halts under the Markets in Financial Instruments Directive (MiFID II).

The Guidelines provide further detail on the parameters that trading venues should consider for the calibration of their circuit breakers, considering as such not only trading halts but also order price collars. The Guidelines also establish that trading venues should immediately make public the activation of a trading halt, the type of trading halt, the trading phase in which it was triggered, the eventual extension and the end of the halt.

The Guidelines are addressed to trading venues that allow or enable algorithmic trading on their systems and to national competent authorities (NCAs) with the aim to ensure consistent application of MiFID II.

The guidelines clarify the provisions of Article 48(5) of the Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II)

Furthermore, the Guidelines are not restricted to a specific type of circuit breaker and apply indistinctly to all mechanisms that trading venues could potentially set in place in accordance with Article 48(5) of MiFID II.

The guidelines apply from 3 January 2018.

The purpose of the guidelines is to develop common standards to be taken into consideration by trading venues for the calibration of their circuit breakers and, more generally, to ensure consistent application of the provisions in Articles 48(5) of the MiFID II.

The circuit breakers put in place by trading venues should use reference prices which reflect the volatility behaviour of the concerned instrument in a reliable and consistent way and, where appropriate, should have the ability to refer to external references.

Trading venues should immediately make public through the means regularly used to make available pre- and post-trade information on the activation of a trading halt (that should be differentiated clearly from suspensions of trading foreseen under Articles 32, 52 and 69(2)(m) of MiFID II), the type of trading halt, the trading phase in which it was triggered, the extension of the halt and the end of the halt.

NCAs to which these Guidelines apply must notify ESMA whether they comply or intend to comply with the Guidelines, within two months of the date of publication by ESMA of the Guidelines in all EU official languages.

Click on the link above for further details.