The Committee of European Securities Regulators (CESR), the body responsible for regulatory harmonisation across the continent’s securities markets, has issued a call for evidence into “micro-structural” market issues affecting European equities markets, such as the growth of high-frequency trading and sponsored access.
The call for evidence is designed to address technology-driven issues that have increased in influence on Europe’s securities markets since CESR compiled evidence from market participants on the impact of MiFID at the start of 2009.
CESR has said that, like its previous call for evidence, the responses would likely feed into the European Commission’s review of MiFID, which is expected later this year.
Specifically, the latest call for evidence seeks comment on high-frequency trading, fee structures, indications of interests (IOIs), co-location, sponsored access and tick size regimes.
CESR has request respondents to provide statistical evidence on the amount of flow in Europe that can be considered high-frequency (both in displayed and dark trading venues) and average order sizes. CESR will also explore whether there is a need for regulatory intervention in setting the fee structures charged by trading venues and the benefits of IOIs, which are potential buy or sell orders issued to a select group of market participants.
All submissions must be delivered to CESR via its website by 30 April 2010. The announcement follows confirmation in February by Timothy Binning, a policy officer in the securities markets unit at the European Commission’s internal markets directorate, that the commission’s review of MiFID would take into account high-frequency trading and other relevant market developments.
CESR’s call for evidence closely mirrors some of the market micro-structure issues raised by US regulator the Securities and Exchange Commission’s ongoing of equity market practices, which has so far investigated, high frequency trading, co-location, short-selling, ‘flash’ orders, sponsored access and dark pools. The SEC has proposed a ban on naked sponsored access, whereby traders use a broker’s infrastructure to trade directly on a market without going through pre-trade risk checks.