MIFID II Market Making Agreement for ETF (MMA)
The MIFID II Market Making Agreement for ETF (MMA) is put in place as from the 1st of January 2018 further MIFID II requirement.
Investment firms have to enter into a market making agreement regarding the ETF in which they pursue a market making strategy in the following conditions:
- Deal on own account
- On average over a one month period, for at least 50% of the daily trading hours, during half of the trading days* :
- Post firm, simultaneous two-way quotes**
- Provide liquidity with comparable size (max 50% difference between bid & ask)
- Providing price within the maximum bid-ask range, i.e.:
- Standard exposure European Equity ETF : 2% maximum spread
- Standard exposure Government Bond ETF: 2% maximum spread
- All Other ETFs : 3% maximum spread. List of all the ETFs and required spread [+ hypertext link]
- Then triggers the following obligations :
- Market makers are expected to provide a minimum size of €100,000 (€100,000 on the bid, €100,000 on the ask)
- A record of all orders must be kept by the market maker for at least 5 years for the regulator to carry a potential audit
No fee incentives
A market maker selects the ETFs he is quoting and sends his orders with the corresponding flag Account code 6 on Euronext Cash Markets, combined with Algorithm flagged for the MiFID II field ExecutionWithinFirmShortCode
You can access self-trade prevention
Reporting: you will receive a daily ETF statistics report but will not appear in the ETF issuers daily statistics report
Euronext will report to regulators any market making activity in particular through our mandatory order record keeping (RTS 24)