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MFA/AIMA Respond to European Commission’s MiFID Review

MFA/AIMA responded to the European Commission consultation on the review of MiFID/MiFIR framework, making a number of recommendations on issues such as investor disclosures, best execution reports, client classification, trade and transaction reporting, market transparency and execution, and post trade name give up.  Also, we emphasized in our comments the treatment of market data costs and the development of the consolidated tape (“CT”) in the EU for both equities and non-equities.  We noted that:

  • MiFID has failed to mitigate increasing market data costs in Europe, and the “reasonable commercial basis” (“RCB”) framework in respect of data provision should be strengthened as a matter of priority, including: greater emphasis on enforcing the existing framework, more stringent requirements on the form and content of RCB disclosures, and stronger provisions on reporting of costs to ESMA and NCAs; and,
  • We generally support the development of post-trade CTs in the EU for equities and non-equities markets. We believe that the CT is more likely to be useful in the context of post-trade and operational processes rather than sourcing liquidity. We strongly oppose the possibility of mandatory consumption of CT data, given that this would undermine the incentive structure for the provider of the CT. Regarding a CT and best execution, we oppose the potential use of a European Best Bid and Offer reference price benchmark to gauge best execution, which would place undue emphasis on price for the purposes of best execution and limit firms’ flexibility in designing their execution policies.