On 16 December 2024, the European Securities and Markets Authority (ESMA) issued a final report regarding its mandates under the MiFIR Review on bond trade transparency and reasonable commercial basis (RCB).

Background

The MiFIR Review (Regulation (EU) 2024/7913) sought to improve pre- and post-trade transparency and introduced two new articles, Article 8a for pre-trade transparency and Article 11a for post-trade deferrals that effectively separates the non-equity transparency regime into two – one for bonds, structured finance products (SFPs) and emission allowances (EUAs) under the amended Articles 8 and 11; and another one for derivatives, with the new Articles 8a and 11a.

On 21 May 2024 ESMA issued a Consultation Paper on the review of Commission Delegated Regulation (EU) 201/5835 (RTS 2) which mainly addresses the transparency mandate for bonds, SFPs and EUAs. The consultation closed on 28 August 2024.

Final report

The final report includes proposals for the amendment of the Level 2 provisions specifying the transparency requirements for bonds, SFPs and EUAs, and the RTS on RCB.

Sections 2 to 7 in the report dealing with the draft RTS 2 amendment includes an introduction covering the mandate and scope of the proposed amendments to RTS 2. It also covers the amended provisions for pre-trade transparency, in particular relating to the definition and characteristics of central limit order books (CLOB) and periodic auctions, and to the limited amendments to the pre-trade waiver regime. It also covers the mandate under Article 11 of MiFIR in relation to the deferral regime for bonds, SFPs and EUAs. The RTS 2 amendment also covers changes to specific transparency fields and flags.

Sections 8 to 14 in the report covering the draft RTS on RCB amendment covers fees for market data containing provisions on the transparency of cost and determination of a reasonable margin. In addition, it covers the information to be provided to the competent authorities and non-discriminatory access to market data. The draft RTS prescribes provision on unbiased and fair contractual terms and market data policies. The draft RTS concludes with provisions on delayed data.

Next steps

The report has been submitted to the European Commission, that will now have three months to decide whether to endorse the draft RTS.

ESMA also intends to publish another consultation paper addressing the transparency mandate for derivatives under Article 11a of MiFIR in early 2025.