MIFID II requirements for regulated markets: ESMA consultation paper

The European Supervisory and Markets Authority has published a consultation paper on the draft regulatory technical standards in relation to the Markets in Financial Instruments Directive II and the Markets in Financial Instruments Regulation. This follows a discussion paper issued by ESMA on 22 May 2014. The part of the consultation dealing with admission of securities to trading on a regulated marked is discussed below.

Article 51(6) of MiFID II requires ESMA to develop regulatory technical standards which shall specify and clarify a number of aspects in relation to:

  • characteristics financial instruments shall have for being considered eligible for admission to trading on a regulated market;
  • arrangements regulated markets shall have in place concerning certain aspects of disclosure obligations; and
  • access to information.

Eligibility for admission

Focusing on the eligibility for admission of transferable securities, ESMA refers to Article 35 of the MiFID I Level 2 Regulation, which already applies to regulated markets in the EU. This sets out the characteristics of transferable securities that are eligible for admission to trading on a regulated market for example, securities must be able to be traded between parties and transferred without restriction. ESMA conducted a fact-finding exercise with competent authorities to see how these rules were working and found the provisions have proven to be appropriate and no specific problems in supervisory practice have been reported. Therefore, ESMA proposes to use these standards as the basis for its regulatory technical standards under MiFID II.

Disclosure obligations

Article 51(3)(1) of MiFID II requires regulated markets to establish and maintain effective arrangements to verify that issuers of transferable securities comply with obligations of initial, on-going and ad hoc disclosure under EU Law. The obligations stem from the Prospectus, the Transparency and the Market Abuse Directive (in the future the Market Abuse Regulation). ESMA states that although practice varies significantly across regulated markets the respondents to the discussion paper reported that arrangements in place are adequate and that the details should be left to the discretion of each regulated market. As a result ESMA proposes to require regulated markets to adopt a policy to verify compliance by issuers which shall be published on the website of the relevant regulated market.

Access to information

Article 51(3)(2) of MiFID II requires regulated markets to establish arrangements to facilitate access to information made public under EU law. ESMA states that the responses to its discussion paper did not raise any issues with the arrangements currently put in place by regulated markets and therefore it does not see a need for detailed, prescriptive requirements. Instead ESMA intends to clarify that arrangements in place should grant easy, fair and non-discriminatory access to information and those arrangements should be published on the website of the regulated market.

Responses to the consultation paper should be received by 2 March 2015.

Click here for the consultation paper (645 pages).