MFA and AIMA filed a joint letter to the German Ministry of Finance (“BMF”) in response to its consultation requesting comments from stakeholders on their experiences and possible need for amendments to MiFID II and MiFIR. While supporting the underlying goals of MiFID II to improve transparency and investor protection, we raised concerns with the significant ongoing compliance burdens and whether these efforts translated into measurable improvements. Specifically, in our letter we discussed:
- Trade and transaction reporting – urging BMF to review whether the manner in which the transaction reporting obligations have been implemented can be simplified to reduce the burden on the private sector and ensure that NCAs receive more accurate and meaningful data;
- Market data – encouraging policymakers to consider whether a more explicit approach of examining fees relative to revenue or costs is warranted;
- Publication of trade data by Approved Publication Arrangements – noting that APAs continue to violate transparency requirements and that further legislative change might be warranted;
- MiFID II cross-border framework – raising our view that equivalence assessments should focus on the outcomes delivered by regulation and supervision, rather than detailed line-by-line correspondence of legal text;
- Traded on a Trading Venue (“ToTV”) (Derivatives) – raising our concern that changes should be introduced to the ESMA assessment around ToTV to ensure that instruments that are economically identical to derivatives traded on MTFs and OTFs are also subject to the MiFID II transparency regime;
- Speed bumps for equities trading – raising our concern that speed bumps do not improve the quality of the markets, undermines pre-trade price transparency by creating illusory liquidity, violates the principle of non-discrimination and undermines the ability of market participants to deliver best execution to their clients;
- Inducements/payment for research – flagging that we look forward to a full consultation to discuss the new framework for research and inducements, and would encourage policymakers to consult on whether the rules on inducements are achieving the intended policy goals; and
- Periodic auctions – supporting the use of periodic auctions, including frequent batch auctions, given that they serve to reduce both implicit costs and explicit costs to investors.
