Securities and Markets

Issue 1158 / 5 May 2022

International Organization of Securities Commissions

Market data in secondary equity markets - IOSCO publishes report - 28 April 2022

The International Organization of Securities Commissions (IOSCO) has published a report on market data in secondary markets for equity securities (the Report), following a consultation published in December 2020.

The Report makes a number of observations on the regulation of market data provided by trading venues or OTC markets. First, it notes that both pre-trade data (i.e. information about orders or quotations) and post-trade data (i.e. information about executed trades) are important in promoting the transparency of trading. It also comments that market data is not interchangeable in all cases and that, where appropriate, regulators should ensure fair access across different execution venues. Finally, it notes that consolidation may improve access to market data as well helping to reduce costs, identifying liquidity and comparing execution quality in jurisdictions where there may be fragmented liquidity.

IOSCO Report: Market Data in the Secondary Equity Market: Current Issues and Considerations (FR04/2022)

Press release

European Commission

Retail investment legislative package - European Commission publishes call for evidence - 3 May 2022

The European Commission (the Commission) has published a call for evidence to inform an impact assessment on a retail investment package of measures as part of its Retail Investment Strategy (Ares(2022)339135). The measures would help to ensure that the legal framework for retail investments empowers consumers, enhances their participation in the capital markets and helps ensure improved market outcomes.

The types of measures the Commission could explore include improving the current disclosure regimes and promoting efforts at national level to enhance financial literacy (including on sustainability matters); addressing conflicts of interest in the advisory and non-advisory process and improving professional standards of advisers; and shifting the focus of current suitability and appropriateness regimes from a product-centric approach to a client-centric approach.

The deadline for responses is 31 May 2022.

Retail investment - new package of measures to increase consumer participation in capital markets

European Securities and Markets Authority

Retail investor protection - ESMA publishes final report - 29 April 2022

The European Securities and Markets Authority (ESMA) has published its final report (the Report) containing technical advice to the European Commission on retail investor protection aspects of the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II). The Report follows the Commission’s July 2021 request for advice and ESMA’s subsequent October 2021 call for evidence.

In the Report, ESMA sets out proposals that aim to make it easier for investors to get the key information they need to take well-informed investment decisions, whilst also protecting them from aggressive marketing techniques and detrimental practices. ESMA’s recommendations include requiring the machine readability of disclosure documents to facilitate the development of searchable databases available to the public; addressing information overload by defining what is vital information and by using digital techniques such as the layering of information; and developing a standard EU format of information on costs and charges.

In the associated press release, ESMA also highlights its support for the Commission’s proposal to prohibit the receipt of ‘payment for order flow’ to address the serious investor protection risks arising from this practice.

ESMA Final Report: On the European Commission mandate on certain aspects relating to retail investor protection (ESMA35-42-1227)

Press release

MAR - ESMA publishes opinions on amendments concerning the promotion of the use of SME growth markets - 4 May 2022

ESMA has published two opinions on the European Commission’s proposed amendments to the Market Abuse Regulation (596/2014/EU) (MAR) for the promotion of the use of medium-sized enterprise (SME) growth markets (GM). The opinions include revised proposals for: (i) draft regulatory technical standards (RTS) on liquidity contracts for SME growth market issuers adopted under MAR; and (ii) draft implementing technical standards (ITS) on the precise format of insider lists and for updating insider lists adopted under MAR. The standards were initially adopted by ESMA in October 2020.

The draft RTS on liquidity contracts now includes two specific clauses in the contractual template that specifies price limits for liquidity providers and waives the obligation of the liquidity provider to enter orders to trade on both sides of the order book in certain exceptional circumstances impeding the normal functioning of the market.

The draft ITS on insider lists includes a new specific permanent insider section for the insider lists of SME GM issuers where Article 18(6), second subparagraph, applies (under which, where justified by specific national market integrity concerns, member states may require SME GM issuers to include in their insider lists all persons who have access to inside information and who are working for them under a contract of employment, or otherwise performing tasks through which they have access to inside information).

Following the adoption of these Opinions, the Commission may adopt the ITS and the RTS with the amendments it considers relevant, or reject them. The European Parliament and the Council may object to the RTS adopted by the Commission within three months.

ESMA Opinion: On the European Commission’s proposed amendments to ESMA’s draft Regulatory Technical Standards on liquidity contracts for SME Growth Market issuers adopted under MAR (ESMA70-449-497)

ESMA Opinion: On the European Commission’s proposed amendments to the draft Implementing Technical Standards on the precise format of insider lists and for updating insider lists adopted under MAR (ESMA70-449-501)

Press release