Esma clampdown puts pressure on Mifid data services

Guidance insists data be free and machine-readable, attacking current practices

Esma data montage

Data services that were launched in response to Europe’s new trading and transparency regime face a potentially costly overhaul, after the European Securities and Markets Authority concluded many were not complying with the rules.

Esma laid out its stance yesterday (May 29) in guidance on the revised Markets in Financial Instruments Directive that had been anticipated by Updated Q&As attacked five practices that have sparked criticism from market participants and legislators. Critics claim some of the data services – known as approved publication arrangements (APAs) – are not complying with a requirement to make the data available for free after a 15-minute delay, while others miss the mark by publishing in a format that is hard to use.

“Many of the practices applied by APAs when publishing post-trade data were at least against the spirit, if not the letter, of Mifid II. We wanted to democratise access to post-trade data, and I believe the new Esma Q&As are a good step towards achieving that objective,” says Markus Ferber, European parliamentary rapporteur for Mifid II, in an emailed statement to

It is expected most of the services will have to make at least some changes as a result. The requirement for fresh investment could even prompt certain APAs to shut up shop, some observers claim. At least 12 of the services exist, and a few were already thought to be struggling to make money.

“It would seem most APAs will need to update their practices to conform to the new requirements. The heightened costs could cause one or more APAs to exit the industry altogether,” says one London-based lawyer.

The APAs are the means through which Mifid II is supposed to meet its transparency objectives. The services must release post-trade data in something close to real time, and are allowed to charge for it. They must then make the data publicly available free of charge 15 minutes after the initial publication.

In most cases, the services are run by exchanges and other trading venues that are authorised to publish trade reports on behalf of investment firms.

We wanted to democratise access to post-trade data
Markus Ferber, European parliamentary rapporteur for Mifid II

Their practices vary. When examined a dozen APAs in April, four were not publishing any trade data into the public domain for free (see table). These were TRADEcho APA, owned by the London Stock Exchange in partnership with Simplitium, Deutsche Börse APA, Euronext APA and APA BME. TRADEcho, Euronext, Deutsche Borse and BME did not respond to requests for comment in time for this article. 



In some cases, this data was provided to vendors that made it accessible as part of a subscription product.

Esma’s guidance rules this out: “The publication of post-trade data through third parties that do not charge specific fees for the relevant post-trade data but raise regular – for instance monthly or yearly – fees for subscribing to their services, does not meet the requirement to make information available free of charge.”

The guidance also tries to make the data easier to use. Some APAs currently publish data as images that cannot be downloaded, which would be incompatible with any efforts to develop a consolidated tape; others make it available only once a user has searched for a particular Isin. Another complaint is that the data may only be available for a short period of time.

Each of these issues is addressed. The guidance states data should be published “in an electronic format that can be directly and automatically read by a computer, and that can be accessed, read, used and copied by any potential user through computer software that is free of charge and publicly available.”

It rules out making data available only via search, while also stating it should be available for at least 24 hours.

In all, the message is clear, says Nathaniel Lalone, a partner with law firm Katten Muchin Rosenman: “Esma guidance often has sphinx-like qualities, however the updated Q&A is particularly direct and specific. Esma clearly has concerns with some of the current practices around post-trade transparency, and has set out quite clearly its expectations on the manner in which this information is to be made available to the public.”  

Maisey Simon_Tradeweb
Simon Maisey

There is no timeline, however. “We have not been given any indications on a deadline for this. Our expectation is that they’ll be looking for us to come up with a plan and a timeframe – as long as that is reasonable, we would be expecting that to be OK,” says Simon Maisey, a managing director with Tradeweb, which runs an APA.

Maisey says Tradeweb will be able to make the required changes from a technical perspective. For APAs in general, however, the guidance could cause a shift in the business model – away from selling the data, and towards charging reporting firms.

“You either charge the people who have the obligation to report the data a certain amount to cover your costs – and a reasonable margin for running the service – or you could charge them less and expect to make more by selling the data that comes out of the APA. The guidance could push the model more towards charging the people who need to report their trades.”

Others say APAs may have technical grounds to feel aggrieved, because the guidance in some places goes beyond a simple clarification of the legislative language of Mifid II – the so-called Level 1 text – and creates new requirements.

One of these is a call for data to be published “in a format which can be understood by the average reader”.

“Many services will not currently be complying with the new ‘average reader’ rule or the 24-hours availability for post-trade data,” says Tim Cant, a partner at Ashurst. “I suspect system changes to ensure 24 hours of availability can be achieved reasonably easily, while the average reader rule may require significant changes to delivery form: if it was a list of non-searchable Isins previously, this now looks inadequate, and a new format is required that can be accessed, read, used and copied through computer software.”

Many of the services were launched by London-based trading venues just five months ago, with the approval of the UK’s Financial Conduct Authority.

An FCA spokesperson says: “The Q&As do not add to what is in the legislation, as opposed to clarifying its meaning. We were full participants in the Esma discussions that produced the Q&As.”

Editing and additional reporting by Philip Alexander

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