CESR calls for trading reforms

Eddy Wymeersch

The Committee of European Securities Regulators (CESR) has said, in a report to the European Commission, wide-ranging reforms to the structure of trading under a revised MiFID rulebook are needed.

CESR said that the introduction of a European consolidated tape for EU market data was a "necessity".

Based in Brussels, the CESR gives technical law to EU-lawmakers, and in this case has said that without regulatory intervention, market forces are "unlikely to deliver an adequate and affordable consolidation of transparency information on a pan-European basis".

The call for reform is expected to be unfavourably welcomed by those wary of giving up control of a valuable source of revenue, especially at a time when their income and market share is being threatened by a host of new competitors.

Speaking of the decision, Eddy Wymeersch, the Chair of the CESR, said that the creation of a consolidated tape "remains an area where it will be key to see concrete steps being taken in the very short-term as we remain convinced of its necessity".

New regulation

The CESR report also called for MiFID to be amended to develop binding technical standards on regulated markets and MTFs' organisational requirements regarding sponsored access, co-location, fee structures and tick sizes. The report stated that the CESR would "work on high-frequency trading to better understand any risks that it may pose to the orderly functioning of markets".

CESR's recommendations also included formal measures to improve the quality of post-trade data to shorten delays for regular and deferred publication and to reduce the complexity of the regime.

In addition, it also wants the post-trade MiFID transparency regime extended to apply to equity-like instruments and the "majority of the bond universe".

Client IDs would also be obligatorily reported whenever orders are transmitted for execution with the transmitting firm, either providing them to the receiving firm or reporting the transaction to the competent authority.

Wyneersch added that, "The opportunity to review the MiFID at this juncture has also provided an important step forward towards convergence amongst supervisory practices and brings a single rulebook a step closer, which will be of benefit both to market participants and retail investors alike, strengthening certainty and greater confidence for all."

The entire CESR report can be read here.

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