The Council of the European Union on Friday set its negotiating position for market overhaul legislation MiFID II and its attendant regulation, officially opening up the trialogue stage.
The Irish presidency of the Council confirmed to theTRADEnews.com that members of the Council on Friday established a final negotiating position on the directive and regulation as expected after permanent representatives agreed technical details earlier last week.
A decision to include equities within the new organised trading facility (OTF) venue category, rules granting central counterparties non-discriminatory access to exchanges and rules governing dark pools were the key resolutions that paved the way for agreement.
In particular, volume caps for use of the reference price waiver - which allows dark pool trades to execute using lit prices as a reference - were set in the Council position. Once 4% of total trading in a specific security has occurred on one dark trading venue, or 8% across all dark venues, use of the waiver will be barred for a period of six months. This will limit institutional investors' ability to execute block trades with minimal information leakage.
Reaching a Council position on MiFID II has come in the final weeks of the Irish presidency of the Council, which will pass to Lithuania from July.
Friday's meeting means MiFID II can now advance to the trialogue stage, where the Council and the European Parliament negotiate a final text with input from the European Commission.
Experts have suggested this will take between six and nine months, although Markus Ferber MEP and lead rapporteur for MiFID II in the Parliament told theTRADEnews.com last week he expects trialogues to begin before MEPs break for summer on 22 July.
Ferber believes a final text will be agreed by the end of the year, although others have suggested this estimate is optimistic, and talks may drag on key issues such as the inclusion of equities in OTFs.
Once a final text is agreed, the European Securities and Markets Authority will draw up technical standards based on the rules, which will then be implemented.
The Commission first published its MiFID II proposal in October 2011.