ESMA Publishes Two Revised Opinions on Transaction on Third-Country Trading Venues

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On December 15, 2017, European Securities and Markets Authority (“ESMA“) published two revised opinions on third-country trading venues for post-trade transparency and position limits requirements under MiFID II. The revised opinions are:

These revise the original opinions issued in May 2017. The opinions addressed the treatment of transactions executed by EU investment firms on third-country trading venues as well as the treatment of positions held in contracts traded on those venues for the position limit regime under the MiFID II Directive.

These opinions stated that, provided that third-country trading venues meet a set of criteria, investment firms trading on those trading venues are not required to make transactions public in the EU via an approved publication arrangement (APA). Likewise, commodity derivatives contracts traded on those trading venues are not considered as economically equivalent over-the-counter (“EEOTC“) contracts for the purpose of the position limit regime.

When publishing these opinions, in its press release, ESMA explained that after the original publication of its opinions in May 2017, it had received requests to assess over 200 third-country trading venues. ESMA stated that it will not be able to assess all of these trading venues prior to the application of MiFID II (January 3, 2018) and highlighted the importance that all third-country trading venues are treated the same in order to maintain a level playing field.

Consequently, the opinions state that pending an ESMA assessment of these third-country trading venues, transactions on third-country trading venues do not need to be made post-trade transparent and positions held in those third-country venue contracts are not considered to be EEOTC contracts.