The European Securities and Markets Authority (ESMA) has published a consultation paper regarding its draft technical standards specifying the trading obligation for derivatives under the Markets in Financial Instruments Regulation (MiFIR).
Article 28 of MiFIR introduces a trading obligation for derivatives, established in accordance with the procedure set out in Article 32 of MiFIR and further specified in Commission Delegated Regulation (EU) 2016/2020 of 26 May 2016 (RTS 4). Derivatives that are subject to the trading obligation may only be traded on a regulated market, multilateral trading facility, organised trading facility or a third country trading venue deemed to be equivalent by the European Commission. Article 32(1) of MiFIR mandates ESMA to develop regulatory technical standards (RTS) specifying the derivatives that should be subject to the trading obligation.
The consultation paper presents ESMA’s approach for determining which derivatives should be subject to the trading obligation based on feedback and comments received from stakeholders responding to a discussion paper on the trading obligation published on 20 September 2016. In addition, the consultation paper includes a new data analysis of those derivatives that are subject to the clearing obligation under the European Markets Infrastructure Regulation, in particular fixed-to-float single currency interest rate swaps and index credit default swaps. ESMA has considered these types of derivatives for the purpose of the trading obligation based on the analysis undertaken for the discussion paper and the subsequent feedback provided by stakeholders.
The proposed draft RTS are included in Annex IV of the consultation paper.
The deadline for comments on the consultation paper is 31 July 2017.
On the basis of the responses received to the consultation, ESMA will finalise the draft RTS and then submit them to the European Commission for endorsement.