The European Securities and Markets Authority (ESMA) has today released a consultation, seeking industry input on draft technical standards which will guide investment firms as regards their order execution policies.
The consultation, part of the watchdog’s Mifid II/Mifir review, is aimed at creating technical standards to enhance the establishment and assessment of investment firms’ order execution and consequently “foster investor protection”.
Last week, the watchdog published new public consultations with the aim of “reducing reporting burden and promoting convergence in the supervisory approach” which included includes five key focuses.
The standards once approved are set to facilitate a consolidated tape provider (CTP) appointment for the EU as well as increased transparency across market factions including more informative pre- and post-trade regimes.
Read more: ESMA publishes new public consultations as Mifir review continues
Specifically, ESMA’s latest consultation is seeking comments from stakeholders on four main points: how order execution policies should be established – including venue selection and instrument classification; how firms will monitor and assess the effectiveness of their order execution set-ups; how investment firms should deal with client instructions; and the investment firm’s execution of client orders through own account dealing.
The watchdog has confirmed that it will consider all input by 16 October 2024 before submitting a final report of technical standards on order execution policies to the European Commission.
In May, ESMA unveiled a 20-point plan for a more effective and attractive capital market union through a unified approach, with the overarching theme focused on more concrete actions and a holistic approach to change.
Importantly, the regulator made clear that it expected all 20 points to be taken on board holistically. Speaking at the time of the announcement, Christine Lagarde, president of the European Central Bank, stated that the European market’s financing needs currently “far exceed” the capacity of the region’s fragmented markets and called for the market to embrace ESMA’s proposals.