- FESE welcomes CESR’s Consultation Paper evaluating the MiFID regulatory framework and its impact on the European market structure. FESE encourages CESR to include in this analysis certain other subjects from the Intermediaries section (e.g. conflicts of interest rules of MiFID, best execution) that are relevant to this analysis. As amply evidenced by the events of the last 1.5 years, the functioning of the secondary markets in Europe is directly affected by the actions taken by intermediaries. This requires coordination with the other MiFID sub-group within CESR.
MiFID has led to some new commercial activity and creativity, but its impact on the quality of European secondary markets is more mixed. There is not yet sufficient evidence to demonstrate that investors and issuers are benefitting from the commercial activity caused by MiFID in terms of better execution terms, higher liquidity or innovation. Certain problems are already evident with respect to execution quality, transparency, neutrality, and the level playing field. Some of the potential problems might especially affect the smaller investors and companies. Whether the outcome in certain areas such as the unregulated OTC trading increases the vulnerability of the system to risks should be studied carefully.
In the equity market data space, market forces are at work for the consolidation of data. Meanwhile, certain actions could help the availability of data. FESE members provide data with a 15-minute delay for free. FESE believes that it would be beneficial for the market as a whole if other venues were also to adopt it. More broadly, CESR can make a strong contribution to the quality, consistency and comprehensibility of the data in Europe by lending its support to FESE’s common statistical methodology (which is now also applied by the major intermediary-operated MTFs) which ensures that trading data and reporting are clearly defined and double or multiple counting is avoided.
The outcome of CESR’s assessment should be 1) to publish new Level 3 Guidance (e.g. the systematic internalization regime, waivers for RMs and MTFs, conflicts of interest and best execution); 2) to provide input to the Commission in relation to potential changes that might be needed at Level 1 and/or 2 (e.g. closing the loophole of transparency for investment firm crossing networks); and 3) to consider industry solutions (e.g. the establishment of a standard for equity market data with a 15-minute delay to be provided for free which CESR could declare as best practice).
