On 17 June 2021, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published a report titled “A review of MiFID II and MiFIR: Recommendations on transparency and a consolidated tape” (the Report).
In the context of the European Commission’s revision of the MiFID II/MiFIR regime, the AFM is proposing a number of recommendations in relation to the MiFID/MiFIR transparency framework. The AFM is recommending working towards meaningful transparency in the capital markets and introducing a consolidated tape for equity and bonds. The AFM notes that the goal is to achieve more efficient pricing and capital allocation, early identification of risks to financial stability, and greater market integrity. The AFM’s recommendations focus specifically on equity, derivatives and bonds markets.
When it comes to meaningful transparency, the AFM notes that it would like to see more targeted and meaningful transparency for investors, market participants and supervisory authorities. Therefore, the AFM believes that consideration must be given to the specific characteristics of the various market segments, market participants and the type of instrument (e.g. equity, derivatives and bonds). In addition, the AFM believes that as many transactions as possible should be conducted on transparent multilateral platforms where such transactions are suitable for that purpose. In the Report, the AFM proposes measures to simplify the MiFIR transparency regime, limiting transparency waivers and deferrals to the size of the transaction only.
Furthermore, the AFM advocates the implementation of a real-time consolidated tape for equity and bonds. This should result in less fragmented price information and other information, while it will also help to create a real European Capital Markets Union and improve opportunities for monitoring execution quality (best execution) for market participants and investors.