European Union policies will exclude many interest-rate derivatives from MiFID II trade transparency requirements until mid-2019 and should be reconsidered, says Markus Ferber, lead lawmaker on the act in European Parliament.
- Ferber comments on so-called “transitional transparency calculation” for interest-rate derivatives published July 3 by European Securities and Markets Authority
- “In my view, ESMA is aiming too low,” Ferber says in e-mail today. “Just because it’s an interim regime, it can’t mean that a significant part of the market for interest rate swaps is exempt from MiFID II transparency provisions for almost one and a half years. That’s fundamentally opposed to the goals of MiFID II.”
- Ferber, in July 14 letter to ESMA, says transitional calculation will exempt “nearly all” interest rate swaps in U.S. dollars and euros and all those denominated in pounds and deemed illiquid from transparency rules
- NOTE: MiFID II starts Jan. 3 and EU policymakers continue to debate fine details of restrictions; law seeks greater pre- and post- trade transparency of transactions
- Ferber asked if ESMA “could give the matter another look to determine if the results ESMA has come up with are really in line with market practices and if nearly the entire market for interest rate swaps should really go into the dark”
- Steven Maijoor, ESMA’s chairman, in July 20 letter to Ferber said “we opted for a rather cautious approach at the start of MiFID II application”
- “The results of the TTC will only apply for 17 months and will thereafter be replaced by the annual calculations,” Maijoor said
- “ESMA has always been strongly in favor of transparent markets and is fully supportive of the MiFIR pre- and post-trade transparency regime for non-equity financial instruments,” Maijoor said, referring to companion regulation to MiFID II