“MiFID and Regulated Markets”
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
Ludovic AIGROT
Chair of the FESE MiFID Task Force
Edinburgh, 29 March 2006
“Benefits of MiFID”
CityCompass Research
Pan-European Executive Briefing
[email protected]
www.fese.org
Outline of Presentation
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
•
•
•
•
•
•
A new framework for Regulated Markets
Greater competition among execution venues
New post-trade reporting rules
Other changes affecting RMs
Open points at Level 2 and Level 3
Conclusion
A new framework for Regulated Markets
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
 Definitions of Market Operator & Regulated
Market: accommodate various market
models
 Operator’s requirements:
 Management and controlling interests
 Organisational requirements
=> Mainly best practice
A new framework for Regulated Markets – cont’d
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
 Requirements regarding admission of financial
instruments to trading & mechanisms to verify
compliance with issuers’ transparency obligations
 Requirements regarding pre- and post-trade
transparency of RM
 Requirements regarding membership in RMs
 Monitoring of compliance by members with RM rules
and identification of breaches of the rules, disorderly
trading or market abuse
=> Some requirements that were in market rules are now
at EU level (consequences for flexibility/innovation)
Competition Among Venues: MTFs
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
• MTF=RM for shares traded on
RMs
• National regime for MTFs
trading other instruments
• Two-way competition
Competition Among Venues: SIs
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
•For some jurisdictions, this represents
a major change
•Differences with RMs/MTFs
•Duty to clients
•Commitment of capital
•Achieving a level playing field
New post-trade reporting rules
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
•Content
•Timing
•Channels
=> RMs can play a key role in assisting
firms to comply with their obligations
Other changes affecting RMs
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
•Cross-border membership of RMs
•Access to C&S facilities
Potential Gains and Risks
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Benefits:
 Competition
 Integration of markets
 Cross-border investments
Other issues
Risks:
 Fragmentation of liquidity
 Fragmentation of price data
 Level playing field among venues
Open Issues at Level 2 and Level 3
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
•SI definition
•Best execution
•Post-trade transparency
Conclusion
Intro
Cooperation
with
Lobbying
Monthly
newsletter
Annual
publication
Other issues
 Main opportunities and challenges
 Areas where industry can work together