European Securities and Markets Authority Publishes Updated Transparency and Position Limits Opinions for Third-Country Trading Venues | Shearman & Sterling LLP

The European Securities and Markets Authority has published two opinions on the application of post-trade transparency and position limits rules to third-country trading venues.
 
The first opinion relates to post-trade transparency requirements under the Markets in Financial Instruments Regulation. Under MiFIR, EU investment firms must publish information on transactions in financial instruments traded on an EU trading venue. ESMA’s opinion states that information about transactions concluded on a third-country trading venue should also be made public in accordance with MiFIR, but it is unnecessary for EU firms to republish such information where the transparency rules of the third-country trading venue are similar to those applicable to EU trading venues under MiFIR. To qualify, relevant third-country trading venues must:

  • operate a multilateral system;
  • be subject to authorization under the third-country’s legal and supervisory framework;
  • be subject to ongoing supervision and enforcement by a third-country regulator that has signed up to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information; and
  • have a post-trade transparency regime that ensures transactions concluded on the venue are published as soon as possible after the transaction was executed or after a deferral period (in narrowly defined situations).

ESMA has published an extensive list of trading venues that meet the criteria, which include the New York Stock Exchange Group, The Nasdaq Stock Market LLC, ICE Futures U.S., Inc., ICE Swap Trade, LLC, I Futures Singapore Pte, Ltd., Abu Dhabi Securities Exchange, Dubai Financial Market, Hong Kong Futures Exchange, The Stock Exchange of Hong Kong Limited, Tokyo Stock Exchange, Shanghai International Energy Exchange, Shanghai Futures Exchange, Singapore Exchange Derivatives Limited, Singapore Exchange Securities Trading Limited, Refinitiv Transactions Services Pte. and EEX Asia Pte.

The second opinion relates to position limits for commodity derivatives contracts traded on a trading venue under the revised Markets in Financial Instruments Directive. ESMA opinion clarifies that the position limits apply to contracts traded on EU trading venues as well as economically equivalent over-the-counter contracts. However, contracts traded on a third-country trading venue should not be considered to be traded OTC (and should not therefore count towards the position limit) where that trading venue satisfies the following conditions:

  • operates a multilateral system;
  • is subject to authorization under the third-country’s legal and supervisory framework; and
  • is subject to ongoing supervision and enforcement by a third-country regulator that has signed up to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.

ESMA has published the list of trading venues that meet the criteria, which are ICE Futures U.S., Inc., ICE Swap Trade, LLC, ICE Futures Singapore Pte., Singapore Exchange Derivatives Trading Limited, Matba Rofex S.A., ASX 24 and EEX Asia Pte. Ltd.

View ESMA’s opinions on the application of transparency and position limits requirements for third-country trading venues.

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