On 21 November 2022, the European Securities and Markets Authority (ESMA) published its annual report 2022 on the application of waivers and deferrals.

Articles 4(4) and 992) of MiFIR require ESMA to monitor the application of pre-trade transparency waivers and to submit an annual report to the European Commission on how equity and non-equity waivers are applied in practice.

This annual report includes an analysis based on waivers for both equity and non-equity instruments for which ESMA issued an opinion to Member State competent authorities (NCAs) in the period between 1 January and 31 December 2021 and includes an overview of the deferral regime applied by NCAs.

The report makes the following conclusions:

  • While UK venues are excluded from the analysis, the results presented in the report suggest that trading under waivers and deferrals is significant specifically for shares and interest rate derivatives.
  • Trading volumes, both in terms of total turnover as well as in the number of transactions, have significantly increased from 2020 to 2021 in the equity space, in light of the ‘Brexit relocation effect’.
  • In line with the observations of the last two years, exchange traded funds (ETF) remain the equity instruments with the highest percentage of ‘dark’ trading with respect to the overall volume traded in ETFs.
  • ESMA maintains the view expressed in the MiFID II/MiFIR for equity instruments to increase the pre-trade transparency threshold for ETFs.
  • With regard to post-trade transparency, deferrals for SSTI and LIS transactions as well as transactions in illiquid instruments were commonly used across trading venues for the different types of non-equity instruments.
  • ESMA maintains its proposal to delete the SSTI waiver.
  • Over the past three years, ESMA has identified a number of data quality issues that have distorted the statistics presented in the various annual reports.