The European Securities and Markets Authority (ESMA) has published additional Q&As on MiFIDII market structural issues, including on DEA and on tick sizes. 

These include an additional question on whether DEA clients accessing an EU trading venue through sub-delegated direct electronic access (DEA) (i.e., a “Tier 2” DEA client) can benefit from the dealing on own account exemption from MiFID authorisation. ESMA answers that yes they can as ESMA does not class Tier 2 DEA clients as having DEA. It does, however, remain unclear whether Tier 1 DEA clients established in third-countries, not dealing on own account, will need an authorisation to access EU trading venues through DEA.  

Another updated question covers whether a firm needs to be authorised as an investment firm to provide DEA to an EU trading venue. ESMA’s answer is again yes, any DEA providers must be an authorised investment firm or credit institution. ESMA also appears to seek to introduce an EU location policy for DEA providers, even when a relevant third-country jurisdiction has been deemed equivalent under MiFIDII, by dismissing the possibility of a licenced firm in an equivalent jurisdiction from providing DEA to an EU trading venue. This would appear to go against the provisions of Article 46 of MiFIR for the cross-border provision of services by firms authorised in an equivalent jurisdiction.  Separately, ESMA also confirms that the tick size regime applies to both orders and quotes. If members have any questions or comments, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.