Regulation (EU) No 600/2014 of the European Parliament and of the CouncilShow full title

Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Text with EEA relevance)

CHAPTER 2U.K.Transparency for non-equity instruments

Article 8U.K.Pre-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances and derivatives

1.[F1Market operators and investment firms operating a trading venue shall make public current bid and offer prices and the depth of trading interests at those prices which are advertised through their systems for bonds, and structured finance products, emission allowances, derivatives traded on a trading venue and package orders.] That requirement shall also apply to actionable indication of interests. Market operators and investment firms operating a trading venue shall make that information available to the public on a continuous basis during normal trading hours. That publication obligation does not apply to those derivative transactions of non-financial counterparties which are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of the non-financial counterparty or of that group.

2.The transparency requirements referred to in paragraph 1 shall be calibrated for different types of trading systems, including order-book, quote-driven, hybrid, periodic auction trading and voice trading systems.

3.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements they employ for making public the information referred to in paragraph 1 to investment firms which are obliged to publish their quotes in bonds, structured finance products, emission allowances and derivatives pursuant to Article 18.

4.Market operators and investment firms operating a trading venue shall, where a waiver is granted in accordance with Article 9(1)(b), make public at least indicative pre-trade bid and offer prices which are close to the price of the trading interests advertised through their systems in bonds, structured finance products, emission allowances and derivatives traded on a trading venue. Market operators and investment firms operating a trading venue shall make that information available to the public through appropriate electronic means on a continuous basis during normal trading hours. Those arrangements shall ensure that information is provided on reasonable commercial terms and on a non-discriminatory basis.

Textual Amendments

Article 9U.K.Waivers for non-equity instruments

1.[F2 The FCA] shall be able to waive the obligation for market operators and investment firms operating a trading venue to make public the information referred to in Article 8(1) for:

(a)orders that are large in scale compared with normal market size and orders held in an order management facility of the trading venue pending disclosure;

(b)actionable indications of interest in request-for-quote and voice trading systems that are above a size specific to the financial instrument, which would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors;

(c)derivatives which are not subject to the trading obligation specified in Article 28 and other financial instruments for which there is not a liquid market[F1;]

[F3(d)orders for the purpose of executing an exchange for physical;

(e)package orders that meet one of the following conditions:

(i)

at least one of its components is a financial instrument for which there is not a liquid market, unless there is a liquid market for the package order as a whole;

(ii)

at least one of its components is large in scale compared with the normal market size, unless there is a liquid market for the package order as a whole;

(iii)

all of its components are executed on a request-for-quote or voice system and are above the size specific to the instrument.]

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[F32a.[F5The FCA] shall be able to waive the obligation referred to in Article 8(1) for each individual component of a package order.]

[F63.The FCA may withdraw a waiver granted under paragraph 1 if it observes that the waiver is being used in a way that deviates from its original purpose or if it considers that the waiver is being used to circumvent the requirements established in this Article.]

4.[F7As] the competent authority responsible for supervising one or more trading venues on which a class of bond, structured finance product, emission allowance or derivative is traded [F8the FCA may], where the liquidity of that class of financial instrument falls below a specified threshold [F9or if paragraph 4A applies], temporarily suspend the obligations referred to in Article 8. The specified threshold shall be defined on the basis of objective criteria specific to the market for the financial instrument concerned. Notification of such temporary suspension shall be published on the website of the [F10FCA].

The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication on the website of the [F11FCA]. Such a suspension may be renewed for further periods not exceeding three months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is not renewed after that three-month period, it shall automatically lapse.

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[F134A.During the transitional period referred to in Article [F1414(6D)], the FCA may suspend the obligations referred to in Article 8 in relation to a financial instrument or class of financial instrument for a specified period if the FCA considers that it is necessary to do so to advance the FCA's integrity objective under section 1D of FSMA.

4B.In deciding whether to suspend those obligations—

(a)the FCA must also take into account—

(i)its consumer protection objective and competition objective under sections 1C and 1E of FSMA; and

(ii)the most recent specified threshold published before IP completion day on the basis of calculations under Article 16 of Commission Delegated Regulation (EU) 2017/583 supplementing Regulation (EU) No 600/2014 on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives;

(b)the FCA may also take into account any other relevant information available in relation to liquidity in the relevant class of financial instrument concerned, whether in the United Kingdom or in any other country.]

5.[F15The FCA may make] technical standards to specify the following:

(a)the parameters and methods for calculating the threshold of liquidity referred to in paragraph 4 in relation to the financial instrument. The parameters and methods for [F16the FCA] to calculate the threshold shall be set in such a way that when the threshold is reached, it represents a significant decline in liquidity across all venues within [F17the relevant area] for the financial instrument concerned based on the criteria used under Article 2(1)(17);

(b)the range of bid and offer prices or quotes and the depth of trading interests at those prices, or indicative pre-trade bid and offer prices which are close to the price of the trading interest, to be made public for each class of financial instrument concerned in accordance with Article 8(1) and (4), taking into account the necessary calibration for different types of trading systems as referred to in Article 8(2);

(c)the size of orders that are large in scale and the type and the minimum size of orders held in an order management facility pending disclosure for which pre-trade disclosure may be waived under paragraph 1 for each class of financial instrument concerned;

(d)the size specific to the financial instrument referred to in paragraph 1(b) and the definition of request-for-quote and voice trading systems for which pre-trade disclosure may be waived under paragraph 1;

When determining the size specific to the financial instrument that would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors, in accordance with paragraph 1(b), [F18the FCA must] take the following factors into account:

(i)

whether, at such sizes, liquidity providers would be able to hedge their risks;

(ii)

where a market in the financial instrument, or a class of financial instruments, consists in part of retail investors, the average value of transactions undertaken by those investors;

(e)the financial instruments or the classes of financial instruments for which there is not a liquid market where pre-trade disclosure may be waived under paragraph 1.

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[F205A.For the purposes of this Article, “the relevant area” consists of the United Kingdom and those countries or regions specified by the FCA by direction in accordance with Article 50B.

5B.The FCA may only give a direction under paragraph 5A specifying that a country or region is within the relevant area in relation to one or more financial instruments for the purposes of this Article if the FCA is able to obtain sufficient reliable trading data to enable it to assess the volume of trading in the financial instruments concerned in that country or region.]

[F36.In order to ensure the consistent application of points (i) and (ii) of paragraph (1)(e), [F21the FCA may make] technical standards to establish a methodology for determining those package orders for which there is a liquid market. When developing such methodology for determining whether there is a liquid market for a package order as a whole, [F22the FCA must] assess whether packages are standardised and frequently traded.

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Textual Amendments

Article 10U.K.Post-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances and derivatives

1.Market operators and investment firms operating a trading venue shall make public the price, volume and time of the transactions executed in respect of bonds, structured finance products, emission allowances and derivatives traded on a trading venue. Market operators and investment firms operating a trading venue shall make details of all such transactions public as close to real-time as is technically possible.

2.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements they employ for making public the information under paragraph 1 to investment firms which are obliged to publish the details of their transactions in bonds, structured finance products, emission allowances and derivatives pursuant to Article 21.

Article 11U.K.Authorisation of deferred publication

1.[F24The FCA] shall be able to authorise market operators and investment firms operating a trading venue to provide for deferred publication of the details of transactions based on the size or type of the transaction.

In particular, [F25the FCA] may authorise the deferred publication in respect of transactions that:

(a)are large in scale compared with the normal market size for that bond, structured finance product, emission allowance or derivative traded on a trading venue, or for that class of bond, structured finance product, emission allowance or derivative traded on a trading venue; or

(b)are related to a bond, structured finance product, emission allowance or derivative traded on a trading venue, or a class of bond, structured finance product, emission allowance or derivative traded on a trading venue for which there is not a liquid market;

(c)are above a size specific to that bond, structured finance product, emission allowance or derivative traded on a trading venue, or that class of bond, structured finance product, emission allowance or derivative traded on a trading venue, which would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors.

Market operators and investment firms operating a trading venue shall obtain the [F26FCA's] prior approval of proposed arrangements for deferred trade-publication, and shall clearly disclose those arrangements to market participants and the public. [F27The FCA must monitor the application of those arrangements for deferred trade-publication and must publish an annual report on how they are applied in practice.]

2.[F28As] the competent authority responsible for supervising one or more trading venues on which a class of bond, structured finance product, emission allowance or derivative is traded [F29the FCA may], where the liquidity of that class of financial instrument falls below the threshold determined in accordance with the methodology as referred to in Article 9(5)(a) [F30or if paragraph 2A applies], temporarily suspend the obligations referred to in Article 10. That threshold shall be defined based on objective criteria specific to the market for the financial instrument concerned. Such temporary suspension shall be published on the website of the [F31FCA].

The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication on the website of the [F32FCA]. Such a suspension may be renewed for further periods not exceeding three months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is not renewed after that three-month period, it shall automatically lapse.

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[F342A.During the transitional period referred to in Article [F3514(6D)], the FCA may suspend the obligations referred to in Article 10 in relation to a financial instrument or class of financial instrument for a specified period if the FCA considers that it is necessary to do so to advance the FCA's integrity objective under section 1D of FSMA.

2B.In deciding whether to suspend those obligations—

(a)the FCA must also take into account—

(i)its consumer protection objective and competition objective under sections 1C and 1E of FSMA; and

(ii)the most recent specified threshold published before IP completion day on the basis of calculations under Article 16 of Commission Delegated Regulation (EU) 2017/583 supplementing Regulation (EU) No 600/2014 on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives;

(b)the FCA may also take into account any relevant information available in relation to liquidity in the relevant class of financial instrument concerned, whether in the United Kingdom or in any other country.]

3.[F36The FCA] may, in conjunction with an authorisation of deferred publication:

(a)request the publication of limited details of a transaction or details of several transactions in an aggregated form, or a combination thereof, during the time period of deferral;

(b)allow the omission of the publication of the volume of an individual transaction during an extended time period of deferral;

(c)regarding non-equity instruments that are not sovereign debt, allow the publication of several transactions in an aggregated form during an extended time period of deferral;

(d)regarding sovereign debt instruments, allow the publication of several transactions in an aggregated form for an indefinite period of time.

In relation to sovereign debt instruments, points (b) and (d) may be used either separately or consecutively whereby once the volume omission extended period lapses, the volumes could then be published in aggregated form.

In relation to all other financial instruments, when the deferral time period lapses, the outstanding details of the transaction and all the details of the transactions on an individual basis shall be published.

4.[F37The FCA may make] technical standards to specify the following in such a way as to enable the publication of information required under [F38data reporting service rules (within the meaning of regulation 2(1) of the Data Reporting Services Regulations 2024)]:

(a)the details of transactions that investment firms, including systematic internalisers, and market operators and investment firms operating a trading venue shall make available to the public for each class of financial instrument concerned in accordance with Article 10(1), including identifiers for the different types of transactions published under Article 10(1) and Article 21(1), distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;

(b)the time limit that would be deemed in compliance with the obligation to publish as close to real time as possible including when trades are executed outside ordinary trading hours;

(c)the conditions for authorising investment firms, including systematic internalisers, and market operators and investment firms operating a trading venue, to provide for deferred publication of the details of transactions for each class of financial instrument concerned in accordance with paragraph 1 of this Article and with Article 21(4);

(d)the criteria to be applied when determining the size or type of a transaction for which deferred publication and publication of limited details of a transaction, or publication of details of several transactions in an aggregated form, or omission of the publication of the volume of a transaction with particular reference to allowing an extended length of time of deferral for certain financial instruments depending on their liquidity, is allowed under paragraph 3.

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Textual Amendments