The European Commission has published a draft notice on the transitional provisions of the Markets in Financial Instruments Regulation (MiFIR) review.
Designed to bring clarity to market participants, the notice outlines MiFIR rules, agreed in June 2023 and folded into MiFIR on 28 February 2024, and which will come into force 28 March 2024. The new provisions are designed to enhance data transparency, remove barriers for the advent of consolidated tapes, optimise trade obligations and prohibit receiving payment for order flow.
Articles 5, 11, 11a, 13, 14 and 26 all feature in the notice. Many provisions in the MiFIR review require Commission delegated regulations to become operational and, therefore, the notice is designed to ensure continuity for market participants and outline how certain elements of the regulation are phasing in.
The European Union (EU) is now busy preparing Commission delegated regulations specifying the new rules. The transitional regime laid down in Article 54(3) of MiFIR ensures existing Commission delegated regulations remain applicable until the new ones enter into force.
Article 13 of MiFIR requires market operators, investment firms operating a trading venue, approved publication arrangements, consolidated tapes and systematic internalisers (SIs) to make pre-trade and post-trade data on transactions in financial instruments available to the public.
Article 13 MiFIR is to be supplemented by a Commission delegated regulation that would clarify a number of aspects of the regulation, in particular what is to be included in the calculation of cost and reasonable margin. As users cannot be charged based on the value that the data represents to them, Article 13 MiFIR cannot be supplemented adequately by Commission delegated regulations and will therefore continue to apply.
Article 26 MiFIR sets out rules on the obligation for investment firms which execute transactions in financial instruments to report the details of these transactions.
Article 26 is to be supplemented by a Commission delegated regulation that will specify which financial instruments need to be reported as well as modify certain details of the transactions to be reported. Article 26 MiFIR therefore cannot be supplemented adequately by RTS 22 and the current rules on transaction reporting continue to apply.
Articles 11 and 11a of MiFIR concern bonds, structured finance products, emission allowances and derivatives and the publication of transaction details. The rules are set to be supplemented by Commission delegated regulations with regards to publication deferral schedules.
As the MiFIR review has significantly amended the calibration criteria, existing deferral rules continue to apply until new Commission delegated regulations come into force, the Commission notice said.
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