First Proposals For Mifid Pre-Trade Transparency Waivers Assessed At CESR Level

CESR publishes today its assessment of the first four proposals for waivers from MiFID's pre-trade transparency requirements for trading systems and order types intended to be offered by regulated markets and MTFs. The MiFID compliance of these functionalities has been assessed at CESR level on the basis of the new joint process that CESR launched in February 2009. In addition to details on the specific cases assessed, the document published today (Ref. CESR/09-324) sets out a description of the joint process.

 Although the legal responsibility for granting the waivers lies with the national competent authorities, CESR Members have agreed that when an operator of a regulated market or an MTF seeks to rely on a MiFID pre-trade transparency waiver, the arrangements will be considered at CESR level at the initiative of the relevant CESR Member. This is consistent with CESR's role in providing a forum for supervisors to achieve greater supervisory convergence and contributes to ensuring an appropriate level of market transparency across Europe.

Of the four cases published today, three were assessed to satisfy the criteria set out in MiFID for granting a pre-trade transparency waiver. One of these systems benefits from the waiver for „large in scale' orders provided for in Article 20 of the MiFID Implementing Regulation. In the other two cases, trading platforms will provide a trading system for crossing orders either at the midpoint of the European Best Bid or Offer (EBBO) or, in addition to the midpoint, at the best bid and offer levels. These systems avail themselves of the waiver for reference price systems provided in Article 18(1)(a) of the MiFID Implementing Regulation.

One order type was assessed to not satisfy the MiFID criteria for waivers. CESR does not consider discretionary orders to be in compliance with the requirements for exemptions from MiFID pre-trade transparency obligations. Such order types contain an undisplayed element that does not have the potential to stay in the order book, which would be required to benefit from the waiver for orders held in the order management facility of a regulated market or an MTF provided in Article 18(2) of the MiFID Implementing Regulation.

Jean Paul Servais, Chair of the CESR MiFID Level 3 Expert Group stated: "It is of paramount importance that regulators ensure the maintenance of level playing field in the application of the pre-trade transparency waivers throughout Europe. Publishing these four cases today is an important signal of CESR’s capability to successfully promote supervisory convergence between CESR Members in this important area."

In addition to the four assessments published today, CESR is currently assessing the MiFID compliance of additional cases submitted to its consideration by CESR Members. New cases are introduced on a regular basis and CESR will continue to update the information available in the document published today (Ref. CESR/09-324) as soon as these cases are agreed on at CESR level.