ESMA Publishes Statement on MiFIR Tick-Size Regime and COVID-19
On March 20, the European Securities and Markets Authority (ESMA) published a statement setting forth its approach to mitigate the impact of COVID-19 on the implementation of the tick-size regime for systematic internalizers (SIs) in EU financial markets under the Markets in Financial Instruments Regulation (MiFIR) and the Investment Firms Regulation (IFR) (the Statement).
In the Statement, ESMA notes that, in these exceptional circumstances, it will be difficult for SIs to comply with the new tick-size regime by March 26, 2020 (which was the deadline) and compliance with the new regime may in fact cause unintended operational risks. Consequently, ESMA does not expect EU financial regulators to prioritise supervisory actions relating to the new tick-size regime from March 26, 2020 until June 26, 2020. Furthermore, in the Statement, ESMA states that EU financial regulators should apply their risk-based supervisory powers in their day-to-day enforcement of applicable legislation in this area in a proportionate manner.
ESMA acknowledges the importance of a timely implementation of this new tick-size regime to ensure a level-playing field throughout the EU markets. However, it also emphasizes that, on its own initiative, the relevant implementing measure has been amended in the past to ensure that SIs observe the tick-size regime up to standard market size.
The Statement is available here.