MiFIR (Regulation 600/2014)

ESMA Updates MiFIR Data Reporting Q&As: July 2019


On July 29, ESMA published an updated version of it Q&As on data reporting under the Markets in Financial Instruments Regulation (MiFIR) ((EU) 600/2014). There is one additional Q&A in section 5 about the date to use in field 24 (expiry date) of RTS 23 for financial instruments without a defined expiration date.

The updated Q&As can be found here.

ESMA Call for Evidence on Potential Product Intervention Measures on CFDs and Binary Options to Protect Retail Clients

On January 18, 2018, European Securities and Markets Authority (“ESMA”) published a call for evidence (“CfE”) on potential product intervention measures on contracts for differences (“CFDs”) and binary options in order to protect retail clients (ESMA35-43-904).

In December 2017, ESMA published a statement explaining it was considering the possible use of its product intervention powers under Article 40 of the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR) to address investor protection concerns arising out of the marketing, distribution and sale of CFDs and binary options to retail investors. It is now seeking feedback from stakeholders on the impact of certain potential measures.

In relation to CFDs, ESMA is considering implementing the following:

  • A standardized risk warning by CFD providers in any communication to, or published information accessible by, a retail client relating to the marketing, distribution or sale of a CFD. At present, ESMA’s preferred option is that this standardized warning would indicate the percentage range of retail investor accounts having losses.
  • Leverage limits on the opening of a position by a retail client that would apply to any payment made to a product provider for the purpose of entering into a CFD, excluding any commission and transaction fees owed to the provider. They would range from 30:1 to 5:1 depending on the different classes of underlying assets.
  • A margin closeout rule on a position-by-position basis. This would standardize the percentage of margin at which providers are required to close out a retail client’s open CFD. The aim is that clients are routinely protected from losing more than they have invested in a consistent manner across providers.
  • Negative balance protection on a per-account basis, to provide an overall guaranteed limit on retail client losses.
  • A restriction on incentivization of trading provided directly or indirectly by a CFD provider, such as providing retail clients with a payment (other than a realized profit on any CFD provided) or a non-monetary benefit in relation to the marketing, sale or distribution of a CFD.

ESMA is currently considering how CFDs on cryptocurrencies fit within the MiFID II regulatory framework as financial instruments. It is seeking views on this and asks whether it should introduce specific restrictions concerning CFDs in cryptocurrencies.

ESMA is also considering a prohibition on the marketing, distribution and sale to retail clients of binary options. This is on the basis that the risks relating to binary options are due to inherent product features that are unlikely to be sufficiently addressed through product restrictions.

The CfE closes to responses on February 5, 2018.

European Commission Adopts Delegated Regulation That Supplements the MiFIR on the Treatment of Package Orders


On August 14, 2017, the European Commission has published the draft text of a Delegated Regulation supplementing the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) with regard to the treatment of package orders.

Currently, Article 9(1)(e) of MiFIR provides that, where certain conditions apply, a waiver is given for both pre- and post-trade transparency requirements for packaged orders. This waiver is, however, limited where the package order is considered “liquid”.

Pursuant to the power of the Commission to adopt a Delegated Regulation establishing a clear methodology for determining package orders for which there is a “liquid market,” the Commission has introduced this Delegated Regulation. Article 1 of the Delegated Regulation sets out general methodology for establishing which for package orders there is a “liquid market.” Articles 2 to 5 then go on to specify the conditions under which a package order can fulfill asset-specific criteria set out in Article 1(b).

Following the introduction of the draft text of the Delegated Regulation, the Council of the EU and European Parliament will consider it. Subject to any objections, it will then enter into force 20 days after its publication in the Official Journal of the EU and apply from January 3, 2018.

To see the draft text of the Delegated Regulation, please click here.

ESMA Comments on MiFID II Implementing Measures

On June 16, 2015, the European Securities and Markets Authority (ESMA) published a statement by on its work on implementing measures under MiFID II (Directive 2014/65/EU) and MiFIR (Regulation 600/2014).

The statement explains that the following three areas are receiving the most attention from stakeholders:

  • Non-equity transparency.  ESMA acknowledges that it will not be able to find the ideal system that perfectly balances transparency and liquidity and that will satisfy the preferences of all market participants. However, ESMA is trying to find reasonable and workable compromises and it is ready to look at the non-equity rules again, once they are in operation, to react to potential deficiencies. ESMA is also thinking about a more flexible system that better reflects market developments and that can be based on better quality data. ESMA’s approach on bond market transparency is likely to look different to the position consulted on.
  • Position limits. The range of contracts captured varies from highly liquid to completely illiquid. This wide variation implies that ESMA has to be cautious and that a one-size-fits-all approach cannot be the solution.
  • Ancillary activity. There will be “major refinements” in ESMA’s proposal compared to the text that was consulted on in relation to the test of whether non-investment firms perform investment services as an ancillary activity to their main business.