Response to ESMA consultation on MiFID II/MiFIR Technical Standards

02 March 2015

Consultation response

Finance Watch response to the European Securities and Markets Authority (ESMA) consultation paper on its draft regulatory technical and implementing standards (RTS/ ITS) regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

Key points:

  • Our response focuses on commodity derivatives and makes some remarks on high frequency trading and transparency.
  • On commodity derivatives, we call for a tighter definition of capital in the “ancillary activity” test to make sure that position limits cover all relevant actors.
  • We urge that position limits be set significantly lower than the proposed 25% baseline plus 15% flexibility for national supervisors. The current proposal would allow individual positions up to 40% of deliverable supply, which is too high to protect markets from excessive volatility.
  • On high frequency trading, we call for various anti-abuse measures to be strengthened, and we advocate for incentives that favour liquidity provision in less liquid markets and conditions, as opposed to benefitting “liquidity providers” (high frequency traders) in already-liquid markets.