Revocation of retained EU law Transitional amendments Amendments to the Markets in Financial Instruments Regulation (MiFIR) and the European Market Infrastructure Regulation (EMIR) Transparency regime for fixed income and derivatives
Articles 8 to 11 MiFIR 23 concern transparency obligations in respect of trading in a wide range of fixed income and derivatives instruments, including covered bonds, 24 exchange traded notes (ETNs), 25 exchange traded commodities (ETCs) 26 and emission allowances. Each of Articles 8 to 11 relates to obligations on market operators and investment firms operating a trading venue. In overview:
Article 8 (Pre-trade transparency requirements for trading venues in respect of bonds, structured finance products, 27 emission allowances and derivatives). Market operators and investment firms operating a trading venue must, on a continuous basis during normal trading hours, make public current bid and offer prices and the depth of trading interests at those prices which are advertised through their systems.
Article 9 (Waivers for non-equity instruments). The FCA has the power to waive the obligation above in respect of certain types of orders or financial instruments, for example, orders that are ‘large in scale’ compared with normal market size (this is sometimes referred to as the ‘LIS Waiver’), or financial instruments for which there is not a liquid market. The FCA is empowered, further to Article 9(5)(e) MiFIR, to make or amend technical standards to specify the financial instruments or the classes of financial instruments for which there is not a liquid market where pre-trade disclosure (as required by Article 8(1)) may be waived (under Article 9(1)); Commission Delegated Regulation (EU) 2017/583 , an onshored Delegated Regulation amended by the FCA, fulfils this role.28 Likewise, the same Delegated Regulation provides the methodology for specifying whether there is a liquid market; the FCA then performs the calculations to determine whether a ‘liquid market’ exists, on the basis of information it must collect daily from, in particular, trading venues and APAs.
Article 10 (Post-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances and derivatives). Market operators and investment firms operating a trading venue must, as close to real time as possible (and in any case within five minutes after the execution of the relevant transaction), make public the price, volume and time of the transactions executed on the trading venues they operate. MiFIR empowers the FCA to specify the details of the transactions that must be made available for each class of financial instrument, which details are currently provided by Commission Delegated Regulation (EU) 2017/583.
Article 11 (Authorisation of deferred publication). The FCA has the power to authorise deferred compliance with the obligation above on the basis of the size or type of the transaction, e.g. where transactions are large in scale compared with the normal market size for a given non-equity (this is sometimes referred to as the ‘LIS Deferral’); similarly to the pre-trade transparency regime, there is also a deferral available in respect of fixed income and derivative instruments, or classes of fixed income and derivative instruments, for which there is not a liquid market. FCA authorisation of the proposed arrangements for deferred publication must be obtained in advance, and those arrangements must be clearly disclosed to market participants and the public. The conditions for authorising market operators and investment firms operating a trading venue to provide for deferred publication are specified by the FCA itself further to Article 11(4)(c) MiFIR, and are currently provided by Commission Delegated Regulation (EU) 2017/583. Under Article 11(3) MiFIR, the FCA may do a number of things in conjunction with giving authorisation, including allowing for the omission of the publication of the volume of an individual transaction during an extended time period of deferral of four weeks.
	Articles 18, 19 and 21 MiFIR similarly concern transparency obligations in respect of trading in fixed income and derivative instruments, but rather than applying to market operators and investment firms operating a trading venue, these apply to systematic internalisers and, in respect of Article 21, investment firms trading over the counter. In overview:
Article 18 (Obligation for systematic internalisers to make public firm quotes in respect of bonds, structured finance products, emission allowances and derivatives). When providing a quote to a client at that client’s request in respect of a non-equity which is traded on a trading venue (ToTV), systematic internalisers must, in a manner which is easily accessible and on a reasonable commercial basis, also make public firm quotes in respect of that instrument. Systematic internalisers must, in addition, undertake to enter into transactions under the published conditions with any other client to whom the quote is made available. There are waivers available which similarly hinge on specifications provided by the FCA under the UK version of Commission Delegated Regulation (EU) 2017/583.
Article 19 (Monitoring by the competent authority). The FCA has a monitoring duty in respect of the application of Article 18, and HM Treasury have the power to specify certain elements of the same article, e.g. what constitutes a ‘reasonable commercial basis’.
Article 21 (Post-trade disclosure by investment firms, including systematic internalisers, in respect of bonds, structured finance products, emission allowances and derivatives). Investment firms (including systematic internalisers) trading away from a trading venue must, on concluding transactions, make public the volume and price of those transactions and the time at which they were concluded via an APA. The FCA has the power to allow investment firms to defer publication of such transaction details or may request the publication of limited details of a transaction or details of several transactions in an aggregated form, or a combination thereof, on similar terms to those provided by transactions caught by Article 11. Like Article 10, Article 21 concerns transactions in fixed income and derivative instruments which are traded on a trading venue.
	The Act allows for the simplification of both pre- and post-trade transparency requirements by empowering the FCA to provide for the nature, scope and detail of those requirements in rules, including, if desired, with recourse to the ‘liquid market’ and ‘ToTV’ concepts. In respect of pre-trade requirements, the FCA will be able to, for example, determine, or set out a mechanism to determine, which trading systems used by venues, and which fixed income and derivative instruments, would be in scope, and in which circumstances waivers would be available. Similarly, in respect of post-trade requirements, the FCA will be able to, for example, determine, or set out a mechanism to determine, which fixed income and derivative instruments would be in scope and in which circumstances deferrals would be available.
	In the case of pre-trade transparency requirements on trading venues, and of post-trade transparency requirements, the FCA’s rule-making powers are coupled with an obligation on the FCA to use those powers.