ESMA_QA_1614
Status: ✅ Answer Published
Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1614
Regulatory Context
Regulation : MIF2
Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Secondary Markets
Level 2 Regulation: Regulation 2017/566 - RTS on the ratio of unexecuted orders to transactions (RTS 9)
Level 3 Regulation: ESMA70-872942901-38 - Q&A on MiFID II and MiFIR market structures topics
Topic: Direct Electronic Access and algorithmic trading
Subject Matter: Trading venues - OTRs
Question
Submission Date: 07 July 2017
Could trading venues set out different OTRs for different types of market participants (e.g. firms engaged in a market making scheme)?
ESMA Answer
Answer Date: 07-07-2017
[ESMA 70-872942901-38 MiFID II MiFIR market structures Q&A, Q&A 3.18] As clarified by Recital 3 of Commission Delegated Regulation (EU) 2017/566 (RTS 9) trading venues may set the maximum ratio of unexecuted orders to transactions at the level they consider appropriate to prevent excessive volatility in the financial instrument concerned. Nothing prevents trading venues from setting the limits on the basis of the different categories of market participants that operate in their systems. In particular, trading venues may determine a specific limit ratio for members or participants subject to market making obligations under a written agreement (Article 17(2) of MiFID II) or a market making scheme (Article 48(2)(b) of MiFID II). The ratio limiting the number of unexecuted orders to transactions should be set in compliance with the objective of Article 48 of MiFID II and supported by statistical analysis of the activity of the different categories of members or participants and the liquidity of the instruments in which they operate.
This document was automatically extracted from the ESMA EMIR Q&A database.