lqdlklg

32. Other European legislation provides further specificity in the definition of financial instruments. Forexample, MiFIR breaks down the list of equity financial instruments subject to transparency requirementsinto shares, depositary receipts, ETFs, certificates and others. Article 8 of MiFIR classifies nonequityfinancial instruments into bonds, structured finance products, emission allowances and derivatives,while the RTS supplementing the EMIR Regulation 32 specifies classes of derivatives in sixclasses (commodities; credit; foreign exchange; equity; interest rate and other). The regulatory contextof the introduction of the order flow requirement also includes widespread changes to pre andpost-trade transparency reporting requirements within the EEA. All of these new obligations are mutuallyreinforcing and facilitate greater client scrutiny of trading behaviour.33. One significant issue is that the number of potential sub-classes of instruments will result in a farbroader reporting obligation than in other jurisdictions, which only assess execution quality of sharesand options. ESMA recognises the need to ensure that the order flow reporting requirement obligationremains proportionate.34. One way of achieving this may be to harmonise the definition of ‘classes of financial instrument’ withthose used in the pre and post- trade transparency regime, insofar as possible. ESMA is conductingwork on non-equity classification and segmentation of financial instruments for the purposes of preand post-trade transparency reporting, and proposes to coordinate both work streams in order toreach shared definitions where possible.35. Other additional data that is relevant to an assessment of investment firms’ direction of order flowmay include disclosures of any relevant conflicts of interest. Potential examples include third partypayments covered by the rules on inducements, close links, or common ownership. Please see the‘Best Execution’ chapter of the Consultation Paper on MiFID II/MiFIR for further examples in thisarea.36. ESMA sees potential value in this information as an indicator of influences in order routing behaviour,which may provide context for the venue identification. Where, for example, a broker is routinga significant volume of orders to an MTF, which it or another entity within the same group owns, or toanother venue in which it has a significant shareholding, that information may be relevant to the assessmentof its order routing behaviour. ESMA is open to whether such information could be providedin a format that would make it useful to clients.37. The Annex to this chapter sets out further rationale and examples of information discussed in thischapter.38. ESMA considers that the information set out in the questions below should be considered in determiningthe content of best execution reporting by investment firms.32EU Regulation No. 648/2012.43