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The European Securities and Markets Authority published a call for evidence on periodic auctions for equity instruments. Following the introduction of MiFID II/MiFIR on 3 January, a new type of periodic auction trading system for equity instruments consisting of auctions of a very short duration during the trading day triggered by market participants has been rapidly gaining market share - frequent batch auctions.
This call for evidence aims to gather relevant information to inform ESMA in developing its understanding of frequent batch auction trading systems, to assess whether and to which extent these systems can be used to circumvent the MiFID II transparency requirements and, should this be the case, to develop appropriate policy measures.
Steven Maijoor, Chair, said: “MiFID II aims to increase transparency of equity markets and foster competition between different type of market participants on a level-playing field. In order to deliver on this objective it introduces various provisions. In noting both the growth in market share of frequent batch auctions and stakeholders’ concerns, this call for evidence will allow ESMA to gather more information on the functioning of frequent batch auction trading systems. Using this evidence, we will assess whether they can be used to circumvent the DVC and other pre-trade transparency requirements under MiFID II. If ESMA comes to the conclusion that frequent batch auction systems violate the spirit and the rules of MiFID II, we will develop appropriate policy responses.”
Stakeholders are invited to provide feedback on this call for evidence until 11 January 2019.