MiFID II – Euronext views on

Market Data

Euronext response to ESMA consultation on market data guidelines

Euronext welcomes the opportunity to respond to ESMA’s consultation paper on the MiFID II/MiFIR obligations on market data. In our consultation response we review the draft guidelines in detail and identify some practical implications of the proposed guidelines that could be reassessed. It is our view that there is a need for guidelines in this area to be looked at in close consideration of the broader market data value chain, market data policies and processes in order to be able to achieve the desired end outcome, while keeping the impact on market data providers and users limited. In addition to commenting on the proposed guidelines, Euronext would like to encourage ESMA to allow for sufficient time for implementation of the guidelines once finalised.

Multilateral trading

This paper addresses the concept of multilateral trading under MiFID II/MiFIR. We believe that in order to reach supervisory convergence with respect to the regulatory treatment of trading platforms changes to MiFID II / MiFIR are required. This paper sets out our recommendations.

Euronext position with respect to the transparency framework for non-equity products

Euronext welcomes the ongoing work with respect to the transparency framework for derivatives. It is our position that the transparency regime for non-equity is, at points, overly complex and at the same time not properly tailored to the different types of instruments. We suggest more needs to be done to ensure transparency is improved. Trading is generally very fragmented across the EU with a significant amount of trading activity done OTC with extremely limited transparency. We urge policymakers to support initiatives that would shift a significant share of trading to transparent and multilateral trading venues that would benefit the market as a whole and enhance visibility for investors. 

Digitalisation

Euronext supports the new Commission’s mandate to promote digital finance in the EU. The EU’s approach in reviewing existing legislative frameworks with a view to developing and promoting the use of new financial technologies is a welcome step in the right direction.

In order to achieve this, we believe that clarifications to the MiFID II framework should be prioritised to accommodate the emergence of new practices, notably in the crypto-assets sector.  

In the below paper, Euronext lays set a set of key principles upon which the EU can build upon in reviewing the existing regime, while maintaining and safeguarding investor protection.

Share Trading Obligation

Euronext fully supports the objectives of the Share Trading Obligation, but it is clear that there are issues with its application, particularly in relation to its extraterritoriality and also its application to dual-listed shares. Therefore we believe its scope needs to be amended immediately to avoid undue complexity and ensure the approach is based on predictable and meaningful criteria.  Further details of our proposal are set out in the memo below.

Market Structure

The objective of strengthening transparent multilateral markets was at the core of the MiFID II reforms but it is now critical that the current review addresses the clear shortcomings of the regime and ensures these objectives are finally delivered upon. Euronext is actively contributing to this debate with submissions to consultations and has published the following policy paper on Equities Market Structure. This paper sets out a factual summary of the main market developments in equity market structure under the MiFID framework and proposes some key recommendations for consideration that we believe will ensure effective price discovery and help simplify market structure in Europe to the benefit of end investors.

Commodities

MiFID II introduced the position limits regime with a view to improve the functioning and transparency of financial and commodity markets. This has provided value to the commodities markets, notably with respect to our benchmark contracts (i.e. Milling Wheat, Rapeseed and Corn).

However, there is merit in amending the existing position limits regime to incentivise the creation, and proper functioning, of new nascent commodity contracts.

This position sets out our views on the Commission’s proposals to alleviate the existing position limits regime in the framework of the MiFID II review.

Equity research

The entry into force of MiFID II has led to a decrease in overall equity research coverage on all of our listed companies. In particular, the introduction of new rules on the unbundling of research and execution services have resulted in fewer analysts covering issuers’ stocks, with some companies being left with no analyst at all.

Euronext is engaging with financial market participants and regulators with a view to increasing listed companies’ coverage, thereby providing them with investment opportunities and additional visibility across our markets.

Find below our detailed position and legislative proposals to increase the production of SME research in the EU.