ESMA consults on pre-trade and post-trade data transparency

The proposal includes a new RTS that converts current guidelines on the cost of market data into legal obligations.

The background to this consultation is the perceived failure of the original MiFID / MiFIR provisions on market data to deliver on their intended objectives.

The subsequent MiFIR review stated that “the ESMA guidelines on the cost of market data should be converted to legal obligations and strengthened” and amended MiFIR by introducing a duty for market data providers to make data available on a reasonable commercial basis, and to ensure non-discriminatory access to relevant information.

The proposed new RTS specifies what information must be provided to a competent authority and also defines what constitutes:

  • contractual terms that are unbiased and fair; and
  • non-discriminatory access to data.

It establishes cost categories for the calculation of fees for the production and dissemination of market data, apportioning costs based on resource use in the following cost categories:

  • infrastructure;
  • connectivity;
  • personnel;
  • financial; and
  • administrative.

The content, format and terminology of market data policies initially contained in guidelines will be converted into legal obligations and market data providers will also be required to remove registration processes for access to delayed data.

RTS 2 amendments

Targeted improvements to pre-trade and post-trade transparency requirements for non-equity instruments are being proposed in connection with RTS 2.

For pre-trade, the proposals include:

  • defining a central limit order books (CLOB) trading system as a continuous auction trading system;
  • potentially using the European System of National and Regional Accounts (ESA 2010) to classify bond issuers;
  • changes and clarification of pre-trade transparency waivers, including the large-in-scale (LiS), order management facility (OMF) and illiquid waiver

For post-trade, the proposals include:

  • Changes to post-trade transparency fields including a new column making convention as well as new fields:
    • Flag; and
    • Trading system.

New bond liquidity thresholds based on bond category as well as new maximum price, as well as volume deferral periods, are also being proposed.

The changes are an attempt to strike a balance between the desirable outcome of real-time (or close to real-time) transparency and the need to enable the deferral of the publication of trade information in certain circumstances.

RTS 23 amendments

Proposed changes to this technical standard involve granular changes to ensure that the reference data reported for transactions will also be suitable for transparency requirements.

They also align the required reference data with international standards, EMIR, SFTR and CSRD and include a possible data format move from XML to JSON.