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Since their adoption in 2014, Directive 2014/65 and Regulation 600/2014 of May 15 - commonly referred to by their acronyms "MIFIF2" and "MIFIR" - have been amended several times. They are once again being amended by Directive 2024/790 and Regulation 2024/791 of February 28, 2024. These amendments are made in accordance with communications from the European Commission dated September 24, 2020 and January 19, 2021. MiFID is due to be amended again if the proposal of May 24, 2023 (Brussels, 24.5.2023, COM(2023) 279 final, 2023/0167 (COD)) is adopted.
The main aim of the 2024 reform is to improve the availability and transparency of financial data by removing a number of obstacles, notably with regard to consolidated publication systems.
The changes made to MiFID 2, although limited in number, are diverse. Two are particularly noteworthy.
An investment firm is considered a systematic internalizer only if it meets the definition given by the 2014 Directive or chooses to fall under the systematic internalizer regime. This option remains unchanged. However, the definition of systematic internalizer has been modified. It was based on quantitative criteria, namely the number of OTC transactions and the size of OTC activities, which implied an assessment on the part of investment firms. This assessment was considered "an excessive burden" (Recital 7, Dir. February 28, 2024). It has therefore been abolished and replaced by a qualitative assessment.
Article 50 of the directive, relating to this synchronization, is repealed (art. 1, 9, Dir. February 28, 2024) and article 22 quater is introduced into the 2014 regulation (art. 1, 22), Regulation of February 28, 2024). The purpose of this change of instrumentum is to extend the synchronization requirement to a number of players covered by the regulation of (recital 11, Dir. de 2024).
MIFIR has been substantially modified. Three changes must me mentioned.
Markets built on a waiver of the pre-trade transparency obligation (art. 4, 2014 Regulation) had to comply with a double cap on volumes so as not to "unduly impair price formation (art. 5, § 1, 2014 Regulation). This double capping complicates, it has been pointed out, "the monitoring of opaque trading volumes" (recital 6, 2024 Regulation). It has therefore been decided to simplify it: the double cap is replaced by a single cap: the total trading volume per financial instrument in the last twelve months at Union level (5, § 1 of the 2014 Regulation, as drafted (art. 1, point 4, 2024 Regulation).
Data communication service providers are the subject of Title IV bis of the Regulation of May 15, 2014. There are three categories depending on the service provided: the approved publication arrangement or "APA", the consolidated tape provider or "CTP" and the approved reporting mechanism or "ARM". CTPs" are currently responsible for collecting trading reports on financial instruments from trading platforms and approved publication arrangements (APAs) and consolidating them into a continuously updated electronic data stream, providing price and volume data by financial instrument. The idea behind the creation of PTCs was that data from trading platforms and ABSs would be consolidated and made available to the public, including all EU trading markets, using identical data tagging, data formats and user interfaces" (Recital 3). "However, to date, none of the entities subject to supervision has applied for approval to act as a CTP" (Recital 4). Several reasons are put forward, including the "insufficient quality in terms of harmonization of the data published by these places of execution, which makes their consolidation too costly, and "the absence of any commercial incentive to apply for approval as a CTP. These obstacles should therefore be removed" (Recital 4). This explains the changes made by the Regulation of February 28, 2024.
The definition of CTP is amended as follows: "'consolidated tape provider' or 'CTP': a person authorized, in accordance with Title IVa, Chapter 1, of this Regulation, to provide a service consisting of collecting data from trading platforms and ABSs, and consolidating this data into a continuously updated electronic data stream providing essential market and regulatory data" (art. 2, § 1, point 35, 2014 Regulation, as drafted in art. 1, point f, 2024 Regulation). And the procedure for issuing an approval, provided for in article 27 quinquies, no longer concerns all providers of data communications services: from now on, the text, which has been amended (art. 1, point 27, 2024 Regulation), concerns only the approval of MRAs and APAs. Specific texts have also been introduced for PTCs: articles 27 quinquies bis and 27 quinquies ter are specific to PTCs (introduced by art. 1, point 28, 2024 regulation). Article 27 quinquies bis concerns the "selection procedure for the selection of a single CTP for each asset class"; article 27 quinquies ter concerns the "selection procedure for the selection of a single CTP for each asset class"; article 27 quinquies ter concerns the "selection procedure for the selection of a single CTP for each asset class".
The prohibition on receiving payment for order flow, laid down by the new article 39 bis of the 2014 regulations, introduced by article 1, point 44, of the 2024 regulations, is new. It is not absolute: it "does not apply to rebates or discounts on the transaction fees of execution venues, where they are authorized by the approved and public fee structure of a trading platform in the Union or a trading platform in a third country and benefit the client exclusively" (above-mentioned article).
