AFME comment on ESMA’s MiFID II/ MiFIR consultation paper and technical advice

03 March 2015

There is a risk that a number of ESMA's recommendations will have a materially adverse impact on investors and corporate issuers and ultimately on economic growth.

Christian Krohn, Managing Director Capital Markets at AFME, said: “AFME urges ESMA to deliver a regime which is consistent with the Capital Markets Union and optimises transparency without impeding market makers' ability to commit capital to the benefit of both investors and issuers.”

AFME’s concerns include the following areas:

• For bond market transparency, AFME are very concerned that the proposed definition of liquid markets is overly broad and does not recognise the dynamic nature of liquidity, and that the SSTI (size specific to the instrument) and LIS (large in scale) thresholds for pre- and post-trade transparency are unsuitably high. This risks reducing overall liquidity available to investors and impacting the ability of issuers to raise financing through debt capital markets


• For equity research, AFME support ESMA’s recognition that research is not prohibited as an inducement if it is paid for by the recipient investment manager or by its clients. However, AFME are concerned that the proposed conditions for using client resources to fund research are so restrictive that in effect they will render the regime unworkable. This risks leading to a significant reduction in the provision of equity research for SMEs. Research is essential for companies wanting to raise equity capital to finance growth and employment.

Full AFME response

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