15 March 2002

LIBA response to CESR Consultation on ATS

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In its position paper the London Investment Banking Association (LIBA) welcomes the amendments to the earlier proposals on Alternative Trading Systems but critisizes CESR’s risk analasys as still hypothetical and not well-defined. CESR’s regulatory objectives are correspondingly unclear. Main points of criticism are:

CESR’s lack of definition of risks and objectives has particularly serious consequences in the case of Standard 3 (Publication of trading information). CESR should not proceed with Standard 3 before a thorough analysis of risks and impacts, which both CESR and the Commission are about to launch.

CESR’s narrowing of the definition of ‘qualifying systems’ is welcome, but it needs to be better defined. CESR should also consider excluding systems whose share of the overall market falls below a de minimis level.

CESR’s lack of definition of risks and objectives makes quantitative discussion of costs and benefits difficult. Nevertheless, CESR must not underestimate the serious consequences in many markets of mandated transparency that has not been well considered and explained.

CESR’s recognition of the need to differentiate or disapply the standards in appropriate circumstances is welcome, but should be more definitely stated.

CESR’s recognition of the need for country of origin regulation is welcome, but should be reinforced and properly enforced.

CESR’s redefinition of user-facing standards as guidance on conduct of business rules is welcome, but the proposals should be scaled back for professional systems, and not apply to inter-dealer systems.

See full LIBA position paper

© LIBA - London Investment Banking Association