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Cboe Europe . “ Given that the current transparency regime for these venues had already been reviewed by ESMA and deemed appropriate , we hope ESMA will conclude that its more recent suggestions should not be taken forward . Decisions to restrict venue choice within the EU , to the detriment of investors , should only be taken on evidence of a clear conflict between serving investors ’ needs and maintaining efficient price formation , and we strongly believe no such evidence exists .”
A liberal UK With regards to market transparency and dark trading , the UK has taken a contradictory stance to Europe following the end of the Brexit transition period at the end of 2020 , largely to foster new interest in its markets . On the 4 January 2021 , as the markets opened following the 31 December deadline , north of 95 % of European share trading volumes had migrated to the EU from the UK , totalling around ¤ 6 billion of daily trading volume . Following this loss , it was rightly predicted that the UK would try to lure some of these volumes back to its shores by liberalising areas where the EU is becoming more stringent .
The UK is yet to make any concrete changes to its regulatory framework , however , in its Wholesale Markets Review ( WMR ) HM Treasury has put out feelers to the industry asking for suggestions on current market structure , with dark trading being one topic at the forefront of discussion . “ It feels to me that the European perspective is seemingly more prescriptive in how they think about dark trading whereas the UK seems to
be slightly more market led ,” says Wicks .
Across the various areas in which the EU appears to be clamping down , the UK has taken a relaxed and liberalised approach , for example , scrapping DVCs all together . In the WMR it cites the US market as an example that has no such cap and yet whose dark trading volumes have plateaued at 10 %. Elsewhere , it is proposing to make no changes to the current periodic auction regime and has also proposed to allow SIs to execute client orders at the mid-point within the best bid and offer for trades below LiS , provided the executed price is within the SIs ’ quoted prices and the execution is in a size no larger than that which is quoted . Under the WMR ’ s proposals , reference price systems will also be able to match orders at the mid-point within the current bid and offer of any UK or non-UK trading venue that offers the best bid or offer .
Be careful what you wish for While the UK may begin to attract more business by liberalising , some have warned that regulators in
30 // TheTRADE // Winter 2021