ESMA discussion regarding the trading obligation under MiFIR

The European Securities and Markets Authority (ESMA) has published a discussion paper regarding the trading obligation under the Markets in Financial Instruments Regulation (MiFIR).

The trading obligation will move over-the-counter (OTC) trading in liquid derivatives onto organised venues thus increasing market transparency and integrity alike. Articles 28 and 32 of Regulation (EU) No 600/2014 outlines the process for determining which derivatives should be traded on-venue. The current consultation is therefore seeking stakeholder’s feedback on the options put forward by ESMA on how to calibrate the trading obligation. The trading obligation under MiFIR is closely linked to the clearing obligation under the European Market Infrastructure Regulation (EMIR). Once a class of derivatives needs to be centrally cleared under EMIR, ESMA must determine whether these derivatives (or a subset of them) should be traded on-venue, meaning on a regulated market (RM), multilateral trading facility (MTF), organised trading facility (OTF) or an equivalent third-country trading venue. The consultation is open for comments until 21 November 2016. ESMA will use the feedback received to continue working on implementing MiFIR’s trading obligation and, if deemed appropriate, draft technical standards specifying which derivatives should be subject to the trading obligation, which will only become effective on 3 January 2018.

Source: Discussion paper: