Should have gone to Specsavers!

Anne PlestedOn first reading of the draft report from the rapporteur on MiFID II it is unclear from the wording if the ban on direct electronic access is only in the context of high-frequency trading. Surely this must be the case, otherwise we may as well all pack up now. Additional draft amendments to the MiFID text worthy of note are:

•    the timeline is crystallising with the final text of MiFID II now expected to be agreed by the end of 2012 or early 2013; draft technical standards from ESMA would follow with due consultation in 12 or 18 months’ time with Member States adopting the laws within 2 years, say by the end of 2014, so we are looking at late 2015 for measures to apply (30 months from entry into force).

•    trading venues must ensure that higher fees apply to certain practices which could create disorderly conditions

•    “It is essential that an effective consolidated tape is in operation as soon as possible” – early development of a viable consolidated tape

•    the definition of ‘Algorithmic trading’ is extended to exclude systems “only used to execute client orders or to fulfil any legal obligation through the determination of a parameter of the order” – that’s clear then!

•    new definitions are introduced for ‘high-frequency trading’ and ‘high-frequency trading strategy’ – a story in itself! One of the main areas of concern last time around, which I wrote about in December, was the proposed obligations for all algos to provide liquidity throughout the trading day – Article 17.3 – “An algorithmic trading strategy shall be in continuous operation during the trading hours of the trading venue to which it sends orders or through the systems of which it executes transactions. The trading parameters or limits of an algorithmic trading strategy shall ensure that the strategy posts firm quotes at competitive prices with the result of providing liquidity on a regular and ongoing basis to these trading venues at all times, regardless of prevailing market conditions.” This has been amended to apply to firms engaged in a high-frequency trading strategy as per the new definition.

•    orders entered into a RM, MTF or OTF must be valid for a minimum of 500 milliseconds!

•    one strike and you’re out! – removal of ‘repeatedly’ from Article 75 on sanctions & breaches

One Response to “Should have gone to Specsavers!”
  1. Anne says:

    I also posted a version of this on LinkedIn and a comment (from a Seconded National Expert, Economic and Monetary Affairs Committee) has added …

    The next step is for other MEPs to table amendments to the Commission proposal, with a deadline of 10 May. The final report is due to be voted in the Economic and Monetary Affairs Committee on 9-10 July.

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