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FESE encourages CESR to include in this analysis certain other subjects from the Intermediaries section, such as conflicts of interest rules of MiFID and best execution, that are relevant to this analysis. As amply evidenced by the events of the last 1.5 years, the functioning of the secondary markets in Europe is directly affected by the actions taken by intermediaries. This requires co-ordination with the other MiFID sub-group within CESR, FESE notes.
Also, there is not yet sufficient evidence to demonstrate that investors and issuers are benefiting from the commercial activity caused by MiFID in terms of better execution terms, higher liquidity or innovation. Certain problems are already evident with respect to execution quality, transparency, neutrality, and the level playing field. Some of the potential problems might especially affect the smaller investors and companies. Whether the outcome in certain areas such as the unregulated OTC trading increases the vulnerability of the system to risks should be studied carefully.
In the equity market data space, market forces are at work for the consolidation of data. Meanwhile, certain actions could help the availability of data. FESE members provide data with a 15-minute delay for free. FESE believes that it would be beneficial for the market as a whole if other venues were also to adopt it.
The outcome of CESR’s assessment should be:
Ø to publish new Level 3 Guidance (e.g. the systematic internalization regime, waivers for RMs and MTFs, conflicts of interest and best execution);
Ø to provide input to the Commission in relation to potential changes that might be needed at Level 1 and/or 2 (e.g. closing the loophole of transparency for investment firm crossing networks); and
Ø to consider industry solutions (e.g. the establishment of a standard for equity market data with a 15-minute delay to be provided for free which CESR could declare as best practice).