Fitting RFQs under MiFID II

With the extension of the MiFID II scope into non-equity asset classes and the tightening of transparency rules, firms relying on requests for quotes (RFQs) have to figure out how this fits under the new regime.

Under MiFID I the regulator defined the market models that a trading venue can operate. With MiFID II this list has grown and now includes RFQs. Whether this venue-sponsored RFQ approach is helpful for the industry is questionable. Firstly, RFQ trading venues are required to publish all bids and offers, together with the volumes submitted by each responding entity. Unless the venue can utilise one of the transparency waivers, many will probably find that is a bit too much transparency for efficient trading. Secondly, there still seems to be some legal uncertainty around how the RFQ model (which is essentially bilateral) fits under a multilateral trading regime of regulated markets and MTFs. Alternatively, firms could consider operating an RFQ model outside of a trading venue under the Systematic Internaliser regime or as straightforward OTC.

However, before judging any of these approaches, the implications of the newly established trading obligation or the introduction of the liquid instrument category across all asset classes need to be considered. Either way, it seems that overlaying new MiFID II rules onto the established workflows around RFQs still requires some work to make it fit.

Leave A Comment

Copyright © 2019 Fidessa Group Holdings Limited. 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.