On 16 December 2024, the European Securities and Markets Authority (ESMA) issued a final report on equity transparency under MIFID II.

Summary

In summary the final report presents proposed changes to the MiFID II level 2 provisions on equity transparency covering:

• Changes to the definition of a liquid market for equity instruments in the form of technical advice. In this context, the new liquidity assessment for shares is now solely based on the market capitalisation instead of the free-float.
• The specification of information to be disclosed for pre-trade transparency purposes, which is also of relevance for the equity consolidated tape. The information relevant for the construction of the European Best Bid and Offer are also detailed.
• The review of the pre-trade transparency requirements for systematic internalisers, notably the calibration of two quoting sizes. More specifically, the minimum quote size and the threshold up to which systematic internalisers have to apply pre-trade transparency requirements are determined on the basis of the standard market size and the more granular average value of transactions (AVT) buckets.
• The post-trade transparency reports, including flags for equity instruments.
• The change to the data source to be used for the performance of the transparency calculations and the related effects to annex IV of Commission Delegated Regulation (EU) 2017/587. ESMA has decided to decommission the use of the Financial Instrument Transparency System and double volume cap IT systems for the purposes of the transparency calculations.

Next steps

ESMA has submitted the final report to the European Commission. In accordance with Article 10 of ESMA Regulation, the Commission has three months to decide whether to endorse the proposed amendments to the MiFID II level 2 provisions.