2014-07-31

ESMA

ESMA Discussion paper on MiFID II / MiFIR (ESMA/2014/548)

The Swedish Investment Fund Association has provided ESMA with the following answers to the discussion paper.

3.8. Post-trade transparency requirements for non-equity instruments

 

Q132: Do you agree with the proposed content of post-trade public information? If not, please provide arguments and suggestions for an alternative.

 

<ESMA_QUESTION_132>

Most important is information about price, day and volume. This is the information the investment funds need to have in order to be able to invest in these instruments. The investment funds needs to analyze the instruments in respect of liquidity and also in order to be able to calculate the current market value. If the proposed information could be made available in a timely manner it would mean a huge improvement in transparency. It will likely increase the number of investment funds investing in those instruments and hence improve the function of the market.

How the publication of this information will affect liquidity is unknown. It could be the case that for small (currency-) markets, like the Swedish, too much transparency could hurt liquidity. Therefore, it would be preferable if the local National Competent Authority (NCA) could adapt the rules to its specific market. For example, if the local NCA suspects that the publication of the identity of a SI would be harmful to liquidity, it is SIFA´s view that the needs of the investment funds will be fulfilled if the NCA only demands aggregated data for an instrument to be published. SIFA would also stress the importance of an impact assessment of the rules after they have been implemented.<ESMA_QUESTION_132>

Q133: Do you think that the current post-trade regime for shares on the systematic internaliser’s identity should be extended to non-equity instruments or that the systematic internaliser’s identity is relevant information which should be published without exception?

 

<ESMA_QUESTION_133>

The first suggestion is to prefer since there is an argument for delaying identity publication in order not to disclose the risk exposure and thus potentially hurt liquidity. Aggregated data is sufficient for the investment funds.

<ESMA_QUESTION_133>

Q141: Do you agree with the proposed text or would you propose an alternative option? Please provide reasons for your answer.

 

<ESMA_QUESTION_141>

SIFA agrees. It is important, as ESMA stresses, that all details of the transactions must be published when the deferral period has elapsed.<ESMA_QUESTION_141>

Q142: Do you agree that the intra-day deferral periods should range between 60 minutes and 120 minutes?

 

<ESMA_QUESTION_142>

The exact length of the deferral period should be dependent on the instrument/market. This is preferably decided by the National Competent Authority. Most important, for investment funds, is that the information will be published.

<ESMA_QUESTION_142>

Q143: Do you agree that the maximum deferral period, reserved for the largest transactions, should not exceed end of day or, for transactions executed after 15.00, the opening of the following trading day? If not, could you provide alternative proposals? Please provide reasons for your answer.

 

<ESMA_QUESTION_143>

Most important to SIFA is that the information will be published. The information will be of best use (for valuation purposes) at the end of the day, but the market impact needs to be taken into account when setting the deferral period. This is preferably done by the National Competent Authority.

<ESMA_QUESTION_143>

Q144: Do you consider there are reasons for applying different deferral periods to different asset classes, e.g. fixing specific deferral periods for sovereign bonds? Please provide arguments to support your answer.

 

<ESMA_QUESTION_144>

Yes, different asset classes can have different functionality and therefore need different deferral periods.<ESMA_QUESTION_144>

Q145: Do you support the proposal that the deferral for non-equity instruments which do not have a liquid market should be until the end of day + 1? Please provide reasons for your answer.

 

<ESMA_QUESTION_145>

Most important to SIFA is that the information will be published. The information will be of best use (for valuation purposes) at the end of the day, but the market impact needs to be taken into account when setting the deferral period. More timely information at the expense of liquidity loss is of little use for investment funds. This assessment is preferably done by the National Competent Authority.

<ESMA_QUESTION_145>

Q146: Do you think that one universal deferral period is appropriate for all non-equity instruments which do not have a liquid market or that the deferrals should be set at a more granular level, depending on asset class and even sub asset class. Please provide reasons for your answer.

 

<ESMA_QUESTION_146>

SIFA believes that the deferral periods should be set at a more granular level. Different asset classes and sub classes can have different functionality and therefore need different deferral periods. The local market aspects also needs to be taken into consideration.

<ESMA_QUESTION_146>

Q147: Do you agree with the proposal that during the deferred period for non-equity instruments which do not have a liquid market, the volume of the transaction should be omitted but all the other details of individual transactions must be published? Please provide reasons for your answer.

 

<ESMA_QUESTION_147>

TYPE YOUR TEXT HERE

<ESMA_QUESTION_147>

Q148: Do you agree that publication in an aggregated form with respect to sovereign debt should be authorised for an indefinite period only in limited circumstances? Please give reasons for your answers. If you disagree, what alternative approaches would you propose?

 

<ESMA_QUESTION_148>

SIFA argues that aggregated data can be sufficient to fulfill the needs of the investment funds if the aggregation is motivated by better liquidity. Therefore we see no need for limit aggregation to limited circumstances for sovereign debt, and this is best decided by the National Competent Authority.

<ESMA_QUESTION_148>

SWEDISH INVESTMENT FUND ASSOCIATION

Fredrik Pettersson

Chief Analyst

Skriv ut Tipsa om den här sidan