On 6 November 2020, the European Securities and Markets Authority (ESMA) issued a consultation paper seeking input from market participants in relation to its draft guidelines on the MiFID II / MiFIR obligations on market data. The consultation paper follows ESMA’s previous work in the area of market data including a report in December 2019 which considered in particular the development in prices for pre- and post-trade transparency.
The draft guidelines concern the requirements stipulated in Articles 13, 15(1) and 18(8) of MiFIR and 64(1) and 65(1) and (2) of MiFID II, that regulated markets, multilateral trading facilities, organised trading facilities, approved publication arrangements (APAs), consolidated tape providers (CTPs) and systematic internalisers (together ‘market data providers) shall provide market data on a reasonable commercial basis (RCB) and ensure non-discriminatory access to that information. Articles 6 to 11 of Delegated Regulation (EU) No 2017/567 and 84 to 89 of Delegated Regulation (EU) No 2017/565 further specify these requirements. The draft guidance also concerns the requirement in Article 13(1) of MiFIR, that trading venues are required to make data available free of charge 15 minutes after publication (delayed data). The same obligation is provided by Article 64(1) and 65(1) of MiFID II in respect of APAs and CTPs.
The consultation paper is structured as follows. Section 3 deals with the applicability of the draft guidelines to those market data providers offering market data free of charge. Sections 4 to 7 covers those aspects of the guidelines that relate to the RCB requirements, including the provision of market data on the basis of cost, the obligation to provide market data on a non-discriminatory basis, the per user model, the obligation to keep data unbundled and the transparency obligations. Section 8 of the proposed guidelines cover delayed data. Each section contains an outline of the legal framework, an analysis of the current situation and an explanation of the proposed guidelines. Stakeholders are invited to comment on the questions listed in each section. The annexes to the consultation paper contain a preliminary costs and benefits analysis and the draft guidelines.
ESMA acknowledges in the consultation paper that it is important to take the different nature, scale and complexity of market data providers into account when specifying the expectations on the market data provisions. In accordance with Articles 1(5) and 8(3) of the ESMA Regulation, ESMA has taken into account the principle of proportionality when producing the draft guidelines. For example, considering the different operating models and cost structures of market data providers the draft guidelines do not harmonise the cost accounting methods but rather require market data providers to have a clear and documented methodology for setting the price of market data. Similarly, to avoid that market data providers operating continuous auction order book trading systems face a high operational and administrative burden when disclosing delayed pre-trade data, and given the limited added value of users of very granular pre-trade data, the draft guidelines clarify that for such systems the obligation to provide delayed pre-trade data are met when providing access to the best bid and offer only
The deadline for comments on the consultation paper is 11 January 2021. ESMA will consider the feedback received and expects to publish the final report and guidelines by Q2 2021.