Article 48(5) of MiFID II provides that Member States shall require a regulated market to be able to halt or constrain trading if there is a significant price movement in a financial instrument on that market or a related market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction that took place. The parameters used for deciding to halt trading and any material changes to those parameters must be reported to the Member State competent authority which in turn reports them to the European Securities and Markets Authority (ESMA). This requirement is extended to multilateral trading facilities and organised trading facilities by virtue of Article 18(5) of MiFID II.
Article 48(12)(d) of MiFID II requires ESMA to develop draft regulatory technical standards (RTS) further specifying the determination of where a regulated market is material in terms of liquidity in a given instrument for that market.
The European Commission has now adopted a Delegated Regulation supplementing MiFID II with regard to RTS for the determination of a material market in terms of liquidity in relation to notifications of a temporary halt in trading. ESMA previously submitted draft of the RTS to the Commission on 28 September 2015.
If neither the European Parliament or the Council of the EU objects to the Delegated Regulation it will enter into force 20 days after its publication in the Official Journal of the EU. It applies from the date appearing in the second subparagraph of Article 93(1) of MiFID II.
