ESMA Delays Publishing Analysis on 3rd Country Trading Venues

ESMA has been asked to assess 200 TCTVs against the criteria it outlined in previous opinion pieces.

The European Securities and Markets Authority (ESMA) has published an update on its website, regarding its assessment of third-country trading venues (TCTVs). This analysis performed by the regulator is to assess post-trade transparency and position limits under MiFID II and MIFIR regulation.

Last year, the European regulator published two opinion pieces about post-trade transparency and position limits. According to the statement, since then, ESMA has received requests to take a look at more than 200 TCTVs and assess them against the criteria the regulator outlined in the opinion pieces.

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“ESMA, to date, has not reviewed a sufficient number of TCTVs to publish a comprehensive list. ESMA considers it important that all TCTVs receive the same treatment in order to maintain a level playing field, so will delay publication of the lists until a more significant number of TCTVs have been assessed,” the watchdog said in the statement released today.

Because ESMA will not yet be publishing the lists, the regulator said that the conclusions reached in the opinion pieces remain valid. Specifically, the articles clarified that investment firms in the European Union (EU) trading financial instruments that fall within the scope of MiFID II on TCTVs, that meet a certain set of criteria, are not required to make these transactions public in the EU via an APA.

Furthermore, ESMA found that commodity derivatives contracts traded on TCTVs, that also meet this criteria, aren’t considered as economically equivalent over the counter (EEOTC) contracts, for the purpose of the position limit regime.

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Criteria outlined by ESMA

The criteria, that TCTVs need to meet as outlined by ESMA are as follows:

1. it operates a multilateral system, i.e. a system or facility in which multiple third-party buying and selling interests in financial instruments are able to interact;

2. it is subject to authorization in accordance with the legal and supervisory framework of the third-country;

3. it is subject to supervision and enforcement on an ongoing basis in accordance with the legal and supervisory framework of the third-country by a competent authority that is a full signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) And,

4. it has a post-trade transparency regime in place which ensures that transactions concluded on that trading venue are published as soon as possible after the transaction was executed or, in clearly defined situations, after a deferral period.

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