EU MiFID II Review Package Published

On March 8, 2024, legislation amending the EU's Markets in Financial Instruments Directive and Regulation were published in the Official Journal of the European Union. The amending Directive and amending Regulation aim to enhance the availability of information on trading and companies for investors. Some of the proposed changes are similar to those that the U.K. has made or is contemplating making as part of the Wholesale Markets Review.

Some of the changes that the amending Directive and amending Regulation will bring in are:

• Removing the open access obligation for exchange-traded derivatives. Trading venues are currently required to provide open and non-discriminatory access to a CCP, with a reciprocal requirement for CCPs to provide access for trading venues, when clearing transferable securities, money market instruments and ETDs.
• Extending the existing exemptions for portfolio compression to all post-trade risk reduction services (PTRR services) for OTC derivatives formed and established as a result of PTRR services. The exemption will apply to pre- and post-trade transparency requirements, the requirement to verify best execution, the requirement for multilateral systems to operate a multilateral trading facility or organised trading facility and the derivatives trading obligation.
• Aligning the derivatives trading obligation with the derivatives clearing obligation according to the revised scope set out in the European Market Infrastructure Regulation.
• Encouraging the emergence of an EU consolidated tape by introducing an obligation for trading venues to contribute market data directly and exclusively to the entities appointed by the European Securities and Markets Authority as the consolidated tape provider for each asset class (shares, ETFs, bonds and derivatives).
• Replacing the double volume cap, which caps the amount of shares a market participant can trade under a transparency waiver, with a single EU-wide volume cap set at seven percent of trades that are executed under the reference price waiver.
• Banning investment firms from receiving payment for order flow, i.e., stopping the practice whereby high frequency traders pay brokers/investment firms to direct their orders from retail and professional clients to the HFT for execution.
• Enshrining into law ESMA's view that the share trading obligation applies to shares admitted to trading on an EEA trading platform. The STO exemption for trades in shares which are non-systematic, ad hoc or irregular and infrequent is being removed.
• Removing the authorization requirement for persons dealing on own account on a trading venue by means of direct electronic access where no other investment services are provided or performed.

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