The European Securities and Markets Authority (ESMA) published new guidance on Wednesday that details how its forthcoming new regulatory regime, known as the Markets in Financial Instruments Directive (MiFID II), impacts market structure.
The detailed guidance sets out how to implement certain provisions of the new MiFID II regime when it comes to market structure issues, such as market data, transparency, and the introduction of new types of trading venues (known as organized trading facilities (OTFs)) for certain products.
Among other things, the guidance aims to ensure harmonized implementation of the new regime, which is slated to take effect in 2018, by promoting common supervisory approaches and practices among regulators.
The guidance also specifically addressees implementation issues for trading facilities and systematic internalizers. For example, the guidance details the steps that will have to be taken by market operators and investment firms that operate an OTF, including best execution requirements. OTFs are a new type of trading venue for bonds, structured finance products, emission allowances or derivatives.