On 1 June 2022, Verena Ross, Chair of the European Securities and Markets Authority (ESMA), gave a speech at the FESE convention. In her speech, Ms Ross shared the ESMA’s views on topics including, the MIFIR review, in particular, the consolidated tape, in addition to insights on the supervisory convergence work in the area of MIFID II and the trading venue perimeter. Finally, recent market events and future lessons were also addressed.

Key points include:

  • MIFIR review – towards the establishment of a consolidated tape: The ESMA fully supports the idea that there should be one, single, real time tape per asset class, as proposed by the European Commission. Furthermore, the tape should be receiving mandatory data contributions from market data providers and the ESMA should select, authorise and supervise the consolidated tape. Furthermore, the ESMA advocates a post trade tape, believing this is the best way to succeed in the short to medium-term. In light of concerns that the current timeline is not realistic the ESMA is suggesting that an adequate time frame be introduced allowing for the launching of the procedure, for entities to apply and for the ESMA to select and subsequently authorise a successful candidate. A staggered approach was also suggested. Finally, in order to establish a successful tape it is vital to ensure consistent publication requirements for the consolidated tape as well as for trading venues and approved publication arrangements.
  • The trading venue perimeter: Ms Ross elaborated on a recent consultation of a proposed ESMA opinion which intends to clarify what a multilateral system is and which provides guidance on when systems should seek authorisation as a trading venue. The opinion aims to enhance supervisory convergence in the EU and level the playing field between market participants. The ESMA is closely analysing the feedback received to this consultation and will be finalising the opinion within the next few months.
  • Digital transformation and crypto-assets not delivered: Given the risks crypto-assets pose to the ESMA’s objectives of financial stability, orderly markets and investor protection, the Commission’s Digital Finance package which includes a regulation on Markets in Crypto-Assets (MiCA) is a welcome step forward. Additionally, the ESMA is already reflecting on how it will fulfill the mandates that EU co-legislators may give them. The ESMA believes that it should play a greater role when it comes to the authorisation and supervision of crypto-asset services providers.
  • Commodities and circuit breakers: Ms Ross reminds the audience that extreme events, such as flash crashes or system disruptions can occur in well regulated and mature markets. Given recent events in Ukraine it is necessary to reflect carefully on the additional tools that could be put in place to better identify potential risks to orderly markets at an early stage, in order to mitigate risks before they materialise. In particular, transparency, through additional information on the over-the-counter positions could allow market participants to better identify risks.