ESMA_QA_1645

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1645

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Regulatory Context

Regulation : MIF2

Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Secondary Markets

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Multilateral and bilateral systems

Subject Matter: Organized Trading facilities OTFs - Liquidity of sovereign debt instruments

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Question

Submission Date: 03 April 2017

The operator of an OTF may engage in dealing on own account other than matched-principal trading only with regard to sovereign debt instruments that do not have a liquid market. (Article 20(3) of MiFID II. How should the liquidity of sovereign debt instruments be assessed?

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ESMA Answer

Answer Date: 03-04-2017

[ESMA 70-872942901-38 MiFID II MiFIR market structures Q&A, Q&A 5.13] ESMA notes that RTS 2 sets out how to determine whether a financial instrument has a liquid market. Although RTS 2 was developed for the sole purpose of further specifying the MiFIR pre-trade and post-trade transparency obligations for trading venues and investment firms, ESMA considers that the methodology and criteria set out in RTS 2 for assessing whether a sovereign bond has a liquid market are also relevant, and should serve as a reference, for the purpose of Article 20(3) of MiFID II.

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This document was automatically extracted from the ESMA EMIR Q&A database.