Catch 22: The share trading obligation
MiFID II refined the definition of OTC trading for equities, making it more difficult for firms to trade away from recognised trading venues or outside of a systematic internaliser (SI). Introduced in 2018, the so-called share trading obligation (STO) effectively wrapped more regulation and transparency... Read More
Time runs out on Swiss equivalence
Over the weekend, the stock market equivalence granted to Switzerland by the European Commission expired. The limited-period equivalence, which was given in December 2017 and extended to 30 June 2019, has run out. Despite Swiss beliefs that all the conditions are still met for recognition by the EU,... Read More
EU financial transaction tax proposal lives on
Back in 2011, the European Commission proposed a common European financial transaction tax (FTT). Despite several postponements and a general lack of support across the EU, a co-operation of member states – including France, Germany, and Spain – remain determined to implement the tax. As per the... Read More
Compromising on trading obligation
Today ESMA changed their mind on the share trading obligation (STO) in the event of a No-Deal Brexit. Under their new approach, any ISIN with the GB country code is now out of scope. Obviously, this change reduces the number of ISINs where EU buy-sides are forced to trade at home. Most importantly, among... Read More
What do you wish for in MiFID 2.1?
The European Commission is required to review MiFID 2 by March 2020. The German Finance Ministry kicked things off at the beginning of this year by inviting comments from the industry. Attending the recent FIA Compliance and Regulation Forum, I noted that many of the regulators and market participants... Read More
Contorted contraptions
Emotions are running high with ESMA’s announcement last evening on the share trading obligation and the immediate response by the FCA. Doubtless market participants had hoped for a more practical approach and are disappointed in a new regime that prevents EU27 investment firms from trading stocks... Read More
ESMA sheds light on OTC trade reporting under No-Deal
ESMA has released a statement which amongst other things includes clarification for EU investment firms that they will have to publish their OTC trades via an EU APA if a UK counterparty is involved. Whilst in Europe this approach may serve to ensure post-trade transparency within the EU27, it is also... Read More
Where will the liquidity shift within Europe?
Recently, Phil from the FT highlighted the risk for about 90 dual-listed companies under a no-deal Brexit. But I think the problem is much bigger. In our own analysis, we took it further and found about 230 liquid stocks (not necessarily dual listed) that had roughly a 50:50 split of turnover across... Read More
One year on and none the wiser
MiFID has achieved the rare feat of becoming a genericized trademark. In the same way that Xerox stands for copy machines in general, MiFID has turned into a synonym for all financial markets’ regulation. Thinking about its scorecard on its first birthday, whether MiFID II really is ground-breaking,... Read More
Setting a good example
Meanwhile in another part of Europe, time is running out for Swiss equivalence. The one year period previously granted in December 2017 is set to expire on 31st December. Switzerland needs equivalent third-country status in order to preserve the status quo and allow EU trading participants bound by MIFID... Read More
It is about time
Last Friday, ESMA finally published its long anticipated call for evidence on periodic auctions. Periodic auctions became popular in 2017 and even more so through 2018 and so they are often linked to the introduction of MiFID II. While some opponents lambasted them as a cynical attempt to avoid the double... Read More
Beyond the obvious choice
Many trading firms are looking towards multi-entity setups to prepare for Brexit. The larger firms tend to have subsidiaries or branches in place, so they already have a flexible hedge against any Brexit scenario. Unfortunately, this can be an expensive contingency plan. What if a firm can’t justify... Read More
