Europex Response to the ESMA MiFID II / MiFIR Review Report on the Transparency Regime for Non-Equity Instruments and the Trading Obligation for Derivatives

Brussels, 12 June 2020 | Europex fully supports the objectives of MiFID II / MiFIR and the G-20 Pittsburgh commitments to “improve the functioning and transparency of financial and commodity markets and address excessive commodity price volatility”. We equally agree with the general intention of the MiFIR pre-trade transparency regime which is meant to work towards this larger policy objective. However, we believe the current calibration of the illiquid (“IL”) and Large in Scale (“LIS”) waiver thresholds severely limits the development of niche and nascent contracts traded on secure and transparent exchanges and cleared through risk mitigating CCP clearing houses. We therefore consider that transparency requirements must be balanced to avoid damaging liquidity, undermining price discovery processes and pushing market participants towards uncleared bilateral trading.

In sum, the pre-trade transparency regime should better reflect that non-equity markets are fundamentally different from equity markets. Furthermore, there are significant differences across the underlying non-equity markets themselves. For example, it is important to understand that commodity markets have specific characteristics and often suffer from a one-size fits all regulatory approach to financial instruments.


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