Report on the need to temporary exclude exchange-traded derivatives from the scope of Articles 35 and 36 of the Regulation (EU) No 600/2014 on markets in financial instruments

Summary:

Report published by the European Commission on 11 September 2017, providing an assessment of the need to temporarily exclude exchange-traded derivatives (ETDs) from the scope of Articles 35 and 36 of the Regulation (EU) No 600/2014 on markets in financial instruments ('MiFIR').

Further information:

Regulation (EU) No 600/2014 establishes uniform requirements in relation to disclosure of trade data to the public, reporting of transactions to the competent authorities, trading of derivatives on organised venues, non-discriminatory access to clearing and non-discriminatory access to trading in benchmarks, product intervention powers of competent authorities, ESMA and EBA and powers of ESMA on position management controls and position limits, provision of investment services or activities by third-country firms following an applicable equivalence decision by the Commission with or without a branch.

Article 52(12) of MiFIR provides that the European Commission should base its report on a risk assessment carried out by the European Securities and Markets Authority (ESMA) in consultation with the European Systemic Risk Board (ESRB) and shall take into account the risks resulting from open and non-discriminatory access provisions regarding ETDs to the overall stability and orderly functioning of the financial markets throughout the Union. In July 2015, the Commission asked ESMA in collaboration with ESRB to carry out such a risk assessment. ESMA delivered its risk assessment in March 2016 based on an ESRB opinion.

In carrying out its risk assessment, ESMA was asked by the Commission to:

• identify potential risks factors and assess their likelihood, as well as the magnitude of the damaging effects on financial systems;
• assess the existence of systemic risk on the basis of risk factors which can be deemed specific to access arrangements pursuant to MiFIR;
• include detailed qualitative and quantitative analysis supporting its arguments.