Date: 11th April 2020

BETTER FINANCE continues to express deep concern about the unwanted "side-effects" of the MiFID 2 regulatory framework on "lit" equity trading in the EU. Below is the summary response to the ESMA Public Consultation on the review of the MiFID 2 and MiFIR transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares. The attached document represents the stylised version of BETTER FINANCE's response; the actual reply form submitted to ESMA can be found here.


General comment

BETTER FINANCE welcomes this public consultation from ESMA – even if its language and content is definitely not intelligible to EU citizens as individual investors – as the lack of transparency on the now dominant “dark” venues is generating serious detriment to them and the real economy.

Although the purpose of MiFID II/MiFIR and the new systematic internaliser (SI) regime was to reduce “dark” cross broker networks and bring back more securities trading to “lit”, regulated markets, a legislative loophole in the new regulatory framework has had an adverse effect, with a 16x fold increase in the number of SIs and a 5x times increase in “dark” trading of European equity and equity-like instruments.

This has significantly affected the process of price discovery, poses significant threats to investor protection and creates a serious detriment (and erosion of trust) for individual, non-professional investors’ participation in capital markets. It is also quite inconsistent with the main objectives of the “CMU” (Capital Markets union”) initiative.



For BETTER FINANCE, it seems obvious that the double-volume cap and the SI regime have not achieved their purpose. Therefore, we propose a simplification of the market structure and a delimitation of dark-lit trading (both OTC and SI) based on a higher large-in-scale (LIS) threshold.