The European Securities and Markets Authority (ESMA) has provided a clarification for the share trading obligation under MiFIR confirming that all EU investment firms forming part of an order transmission chain for shares should ensure that the ultimate execution complies with the trading obligation.  This is the same regardless of whether the eventual firm executing is a non-MiFID firm located in a third country.

ESMA and the European Commission, are seeking to resolve potential issues for firms seeking to trade shares on a primary venue in a  third country in absence of an equivalence determination.  In particular, ESMA has noted that a lack of an equivalence determination means the European Commission does not have evidence that the EU trading in a third-country share is “systematic, regular and frequent”, thus trading should fall outside the scope of the trading obligation.  This should be the case at least whilst equivalence determinations are being prepared.

Separately, ESMA has also updated its Q&A document on MiFIR data reporting with a number of additional Q&A relevant to AIMA members including questions on: how transaction reporting in circumstances where portfolio management has been outsourced; the reporting of primary markets activities and corporate events; and the reportability of the individual legs of a swap.

If members have any questions or comments, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.