Requirements for trading venues
MiFID II introduces stricter requirements for all trading venues that aim to ensure the fair and orderly functioning of financial markets.
This also concerns requirements regarding the structure of the business operations, such as the risk control function. Other examples are requirements regarding conflicts of interest, the stable and constant functioning of the systems and control of the trading that takes place on the venue. The latter is possible, for example, through control mechanisms such as circuit breakers. Moreover, rules have been drawn up for the manner in which the order book is structured, for example the tick size in which trading is possible and obligations to provide liquidity.
In addition, it is the intention to increase the transparency of the trading, and to restrict trading on dark pools. For instance, the scope of the transparency obligations regarding pre- and post-trading has been enlarged. Moreover, with the 'trading obligation’ more trading will be directed to the regulated markets, MTFs and OTFs. To better enable best execution, trading venues and SIs have to make data available about the quality of the execution of transactions on their venues.
Finally, additional rules have been laid down to improve the provision of information to supervisors and ESMA. This includes: