ESMA moves to relax EC’s ‘phase-in’ of MiFID II bond rules

ESMA has suggested several changes to the proposed ‘phase-in’ of MiFID II transparency rules for non-equity instruments.

The European Securities and Markets Authority (ESMA) has told the European Parliament that the ‘phase-in’ of MiFID II bond rules should be introduced in four stages over several years.

Steven Maijoor, chair at ESMA, gave a speech to the European Parliament on ESMA’s remaining concerns with MiFID II rules.

He explained ESMA agrees the rules should be phased-in, but it has “deviated from the suggestions by the Commission when it comes to designing the actual phase-in requirements.”

ESMA has suggested all four stages of the phase-in should be included in the standard itself from the outset and the move to the next stage is already planned and included.

Should any unintended circumstances occur during the phase-in, ESMA would stop the move to the next stage and amend the standard.

Maijoor added: “We believe our approach gives maximum clarity and legal certainty to all involved. It would also cater for the European Parliament’s scrutiny process.”

ESMA’s proposal would also “ensure that voice trading and request for quote systems… would not profit from a substantial competitive advantage over other trading platforms for a long period of time.”

Fixed income traders are warning pre-trade transparency rules under MiFID II will undermine already diminishing liquidity, as no realistic solution to the problem currently exists.

An investigation by The Trade found traders are regularly being forced to ‘show their hand’ when using trading platforms to trade bonds, as screen prices are often not executable.