Five things we learned from the FCA’s MiFID II venue roundtable

FCA’s MiFID II trading roundtable have been published. What did we learn?

• ESMA Level 3 Q&As will not be published until the implementing measures are finalised. Given what now appears to be an inevitable delay of 12 months, the guidance could be significantly delayed as questions remain outstanding in several key areas such as transparency for non-equity securities.
• The FCA advised that their own second MIFID II consultation paper was likely to be published in the middle of 2016. Again the exact timing of this depends upon the progress with the implementation measures.
• Venues continue to stress concerns about the new obligations.  For example, where the entity utilising their services is not obliged to report and therefore creates an obligation upon the venue to report the activity executed to meet reporting obligations.  Further clarification is still required here however clearly this creates a significant onus upon the venues that does not exist today. The FCA did confirm as per their guidance that a venue would be expected to report such activity to their home member state.
• The effective processing of transparency waivers is also a significant concern to venues. The FCA confirmed that interfaces are in place between it and ESMA which allow for batch processing to assist with the timely processing of waiver applications. Waivers will need to be in place for each venue for market participants to utilise the appropriate exemptions and deferrals from publication requirements.
• Under AOB the FCA was questioned on the approach towards direct market access (DEA) by 3^rd country clients (non-EEA). The FCA advised there are a couple of key considerations here. It confirmed questions have been raised with the European Commission about exemptions in Article 2.1 (d)  for those dealing on own account with DEA access based outside EU. With regards to firms based outside the EEA providing DEA access, the FCA confirmed that the consultation paper followed the Treasury implementation legislation which did not permit firms based outside the EEA from providing access to EEA trading venues.