NSA response to ESMA Consultation Paper on the trading obligation for derivatives under MiFIR

The NSA notes and appreciates that ESMA has listed to the feedback provided from several stakeholders regarding some of the questions raised in the Discussion Paper (DP).

 In particular, the NSA would like to express support to the decision by ESMA not to include the IRS 10 yr SEK in the TO. As mentioned in our reply to the DP these contracts are not liquid and 99 % OTC-traded. We fully agree to ESMA’s solution that contracts denominated in a particular currency should only be considered to be subject to the CP where at least 3 tenor points are considered to be liquid.

 The NSA also appreciate that ESMA has put an effort to improve the data and methodology from the discussion paper to this consultation. For example, we agree to the change to effective date instead of the execution date.

 However, we would like to raise some key points elaborated in our response document.

 NSA__reply_esma_cp_mifid_to_002.pdf

NSA response to the proposal from the EC to amend MiFID 2 Delegated Regulation on SI definition

On 20 June 2017, the Commission published a proposal with a 4 week consultation period to amend Delegated Regulation (EU) 2017/565 with the purpose to clarify the precise scope of the definition of "systematic internaliser" to ensure uniform application of this term and avoid circumvention.  The Commission’s focus is to restrain the increasing OTC trade in equities within the so-called Brokers Crossing Networks (BCN), which in their essence are OTC dark pools.

However, the proposal is not targeted towards this concrete challenge; it is much wider in scope, which may lead to unintended consequences i.e. less efficient markets for all instruments.

In order to accommodate a more targeted approach, the NSA has provided a concrete proposal for amendment, which can be found on page 3.

NSA_reply_on_Commission_proposal_on_the_change_of_level_2_SI_network.pdf

NSA responded to the ESA review

Today NSA responded to the ESA review,
see the response here.

Response regarding ESMA’s Consultation Paper - draft guidelines on the Market Abuse Regulation

Key points

It is important that the implementation of the Market Abuse Regulation (MAR) is done in a way that prevents any form of market abuse but care must be taken to ensure that the functioning of the securities markets in the European Union is not hampered.

Generally we find that the suggested documentation and assessments required by MSR’s on daily activities are too extensive and burdensome in comparison with the potential benefits in the event that a case of market abuse arises and is to be investigated by the authorities.

It is important that ESMA provides further guidance in relation to when the disclosure obligation occurs. We especially se merit in ESMA commenting on and taking into account the concept of the two fold notion, where it is generally accepted that inside information can be used for insider trading before an issuer has an obligation to disclose this information following article 17, e.g. when the inside information may not be sufficiently precise.