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).
Related policy area
Deregulation of equity, bonds and derivatives markets has undermined the primary objective of financial markets: to channel savings and capital to the most promising economic developments, while managing risk adequately.
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.
Subscribe to our newsletter
Receive our monthly digest in English, French or German