Uber transparent?

ESMA has today published the latest Q&A on investor protection. The document spans many different topics, but what sparked my interest in particular are the comments around the best execution quality reports. Under MiFID II brokers have to publish their top 5 execution venues. Firms trading as non-members (i.e. via another broker) are asking whether it is the exchange or the broker that they need to name. ESMA clarifies that two separate quality reports are needed where distinct services are offered, one for the top 5 exchanges and another for the top 5 brokers. One might argue that this level of transparency is somewhat ‘uber’ the top. On 1st May 2018 (see Q6) I will be able to download a report from every firm’s website (see Q8) showing me the key business relationships they have with every single broker subject to MiFID II.

Considering that ESMA is also cracking down on the practice of paying for research with order flow, this new ‘uber transparency’ is set to change market structure significantly in the coming years.

2 Responses to “Uber transparent?”
  1. Martina says:

    Interesting article – thanks Christian

    Do you think this helps answer the question of whether retail stockbrokers should list the top 5 market makers (RSPs) when providing the information required by MiFID II?

  2. Christian Voigt says:

    Martina, thanks for your response. ESMA does not mention this explicitly, but RTS 28 is intended to enable the public and investors to evaluate the quality of a firm’s execution practices. Therefore the RTS 28 report could include market makers along with other brokers. Whether this is also the interpretation of the regulator remains open.

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