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

More documents

Recommendations

Info

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
Memorandum MiFID II – Pre- and post-trade transparency tape to offer but it is extremely expensive. What we want is a consolidated tape that is usable and available to everyone and not just as a very costly bespoke product. In the Commission’s proposal the approach this time is not simply limited to waiting for the industry to deliver. There is, however, some logic behind going for the commercial solution, which is that the main obstacle to the industry coming up with a consolidated tape is data quality. Therefore, what the Commission hopes is that by increasing data quality and harmonising the way data is reported across Europe it will be more economical to aggregate all data and hence for the industry to come up with a commercial solution. If it fails to do so, the current proposal contains a very strong review c l a u s e , w h i c h a l l o w s t h e Commission to mandate a consolidated tape. How we are going to have preand post-trade transparency is a question that is going to be dealt with mainly at level 2. What is very important, however, is that we ensure that the empowerments, which we put in place at level 1, actually contain all the relevant criteria. Nevertheless it is going to be at level 2 that we will have to go through the market instrument b y i n s t r u m e n t t o e n s u r e transparency and that the market will continue to function at the same time. _____________________________ Niall Cameron Global Head of Credit Trading, HSBC Mr Cameron focused on nonequities. To start with, we are making a mistake defining it as non-equities since it lumps all securities that are not equities into one single category. Credit derivatives are not the same as commodities, which are not the same as government bonds and so forth. One of the key things is that we need to start to get some granularity. We must take into account that each of the markets
Page 1 and 2: Memorandum MiFID II - Pre- and post
Page 7: Memorandum MiFID II - Pre- and post
Page 19: Memorandum MiFID II - Pre- and post

MiFID II â Pre- and post- trade transparency - QED

Create successful ePaper yourself

Delete template?

Save as template?

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