MiFID II – Pre- and post- trade transparency - QED

Memorandum
MiFID II – Pre- and post-trade transparency
the sense of retail versus
wholesale In the Commission’s
view a large-in-size order is
something that is large for the
market as a whole. Hence, the
Commission does not simply
envisage the pre- and post-trade
transparency rules as being good
for retail investors, they consider
that they are there for market as a
w h o l e a n d s h o u l d b e n e fi t
everyone, not just small investors.
Concerning non-equities, a lot of
work will have to be carried out at
level 2 in order to calibrate the
requirements to individual
markets, presumably even
individual instruments. Crucially, in
the bond market not every
country or company is going to be
equally liquid. Trading is not going
to happen in the same way, there
will be differences in the liquidity,
in the futures markets and for
derivatives even more so. Some
are going to be very highly
s t a n d a rd i s e d w h i l e o t h e r s
essentially are going to be more
b e s p o k e p r o d u c t s t r a d e d
amongst more sophisticated
investors. The ones which are
going to get caught by the new
rules need to be able to continue
to be traded. The objective of
introducing these requirements is
not a halt for trading but to ensure
that trading can continue in a
transparent way. Similarly,
following the calibration according
to type or even individual
instrument, the waivers have to be
calibrated appropriately to actually
match the elements of the
transparency requirements. The
same goes for delayed disclosure,
which is going to be especially
important in the non-equity
sphere, where we have to take
into account what the appropriate
time frames are for different
markets.
R e g a r d i n g p o s t - t r a d e
transparency there was a general
expectation when MiFID I came
into force that the market was
going to be able to deliver on a
consolidated tape, which so far
has not been the case. There are
some people who say they
actually do have a consolidated