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Transparency
Transparency under MiFID II/MiFIR
The concept of transparency can be considered as one of the most impactful regimes under MiFID II/MiFIR in terms of how the provisions thereunder have been expanded to new market segments, firms and instruments.
Stipulating transparency requirements for trading venues as well as for Systematic Internalisers (SIs) and investment firms trading over the counter (OTC), MiFID II/MiFIR will expand their reach to include equity-like and non-equity instruments.
While national competent authorities (NCAs) may waive some of the pre-trade transparency obligations for trading venues, the European Commission reserves the right to review and adjust these requirements two years after they have come into force. In addition, a volume cap mechanism has been introduced to limit the trading under some of these waivers. In the past, the waivers had entailed “dark pools” of large amounts of trading being conducted anonymously, with regulators arguing that the inconsistent implementation of a waiver regime across venues has harmed price formation and weighed on transparency.
As outlined above, transparency under MiFID II/MiFIR concerns pre-trade transparency requirements and post-trade disclosure that, once implemented, expose the vast majority of trading in financial instruments to publication.