18 February 2015

ESMA published Addendum Consultation Paper to implementing rules for MiFID II/MiFIR

The consultation runs until 20 March 2015.

This CP covers the following non-equity asset classes: (1) foreign exchange derivatives; (2) credit derivatives; (3) other derivatives; and (4) contracts for difference (CFDs).
For each asset class two sections are provided: the first presents the analysis on the definition of a liquid market and the second includes the calculations on the pre-trade and post-trade transparency large in scale (LIS) and size specific to the instrument (SSTI) thresholds.

The last section of the CP completes draft RTS 9 (Transparency requirements in respect of bonds, structured finance products, emission allowances and derivatives) published in Annex B of the CP on MiFID II/MiFIR on 19 December 2014, where rules and tables were included for bonds, structured finance products, emission allowances and derivatives not covered in this more recent analysis.

ESMA already put into practice in October 2014 a data quality plan to address those issues. They are mainly due to the absence of a commonly-agreed trade identifier, the incorrect or inconsistent reporting of some data fields or the difficulty that some counterparties faced in obtaining the LEI on time for the go-live of the trade repository system on 12 February 2014.  Indeed, a wider use of a unique trade identifier and of the LEI would have facilitated reconciliation of the reports per and across TRs and ESMA’s analysis.

Furthermore, data quality issues are further exacerbated by the heterogeneous interpretation of the requirements provided by the Regulation in terms of product classification during the initial implementation period of the reporting system, which corresponds to the period available for a comprehensive analysis of the non-equity universe. However, ESMA considers that the quality of TRs’ data is, all in all, sufficient to provide a general overview of the OTC trading activity of a class of derivatives over a certain period and encourages respondents to provide feedback on the outcome of the analysis performed.

ESMA will use the input received to finalise its draft RTS which will be sent for endorsement to the European Commission in mid-2015. MiFID II/ MiFIR and its implementing measures will be applicable from 3 January 2017.

Full addendum consultation paper

Full press release

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