The European Securities and Markets Authority (ESMA) has launched a consultation seeking input from market participants on its second Markets in Financial Instruments Directive/Markets in Financial Instruments Regulation Annual Review Report under Commission Delegated Regulation.
The paper provides for the annual assessment of the operation of the thresholds for the liquidity determination of bonds and the trade percentiles determining the pre-trade size specific to instrument (SSTI)threshold.
ESMA explains that this is currently subject to a four-stage phase-in regime under RTS 2.
The consultation proposes to move to stage 3 for the liquidity assessment of bonds; move to stage 3 for the SSTI percentile of bonds; and not to move to stage 2 for the SSTI percentile of non-equity instruments other than bonds.
These proposals are designed to increase the transparency available to market participants in the bond market.
ESMA will consider the feedback and expects to publish a final report and submit, if necessary, regulatory technical standards (RTS) to the European Commission for endorsement in July 2021.
Following such endorsement, the RTS are then subject to a non-objection procedure by the European Parliament and the Council.
The consultation closes on 11 June 2021.
