Double whammy

The latest published version of MiFIR is narrowing waivers, while widening its impact. Specifically, it has added a double cap limit to the pre-trade transparency reference price waiver. Limitations that may apply to the 4 existing waivers continue to evolve even as the Irish presidency of the Council of the European Union enters its final month before handing over to Lithuania.

Article 4 a) was added to the text in December last year and has since switched between the use of a minimum threshold and the introduction (in March 2013) of a trading volume cap mechanism. In an attempt by the Council to avoid a negative impact on price formation venues will be obliged to have systems and procedures in place to manage trading limits at both venue and overall EU levels.

This narrowing of scope of the reference price waiver could of course be another bargaining chip – like the half second order resting time – in the trilogue negotiations later in the year. But aside from the wider debate on the use of waivers to protect the buy-side from market impact, changes like this will affect not just the venues. At the technology level trade execution platforms and smart order routers will need to be up to the job as firms seek to avoid rejection of their orders when a venue has reached its single or double cap limit.

Just one of the many potential regulatory changes filling up the ‘to do’ list as MiFID II rumbles on.

Leave A Comment

Copyright © 2017 Fidessa group plc. All rights reserved.

The information contained within this website is provided for informational purposes only. Fidessa will use reasonable care to ensure that information is accurate at the time it is made available, and for the duration that it remains on the site. The information may be changed by Fidessa at any time without notice. We also reserve the right to close the website at any time. No representation or warranty, expressed or implied, is given on behalf of Fidessa or any of its respective directors, employees, agents, or advisers as to the accuracy or completeness of the information or opinions contained herein or its suitability for any purpose and, save in the case of fraud, all liability for direct, indirect, special, consequential or other loss or damages of whatever kind that may arise from use of the website is hereby excluded to the fullest extent permitted by law. Any decisions you make based on the information in this website are your sole responsibility and information on the website should not be relied upon in connection with any investment decision.

The copyright of this website belongs to Fidessa. All other intellectual property rights are reserved.

Reproduction or redistribution of this information is prohibited except with written permission from Fidessa.