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CESR publishes advice on Mifid

Thursday 14 October 2010 - by Nicola York

The Committee of European Securities Regulators has published its second set of technical advice to the European Commission on the review of the Markets in Financial Instruments directive.

The advice covers standardisation and organised platform trading of over-the-counter derivatives, post-trade transparency standards and client categorisation.

CESR says it believes that market participants should develop further legal and product standardisation and more automated processes. It does not recommend mandating the use of electronic confirmation systems at this stage.

But it says that targets should be set for increased standardisation and electronic confirmations in order to achieve more straight-through processing.

CESR also thinks that European regulators should be “strongly involved” in international fora where these issues are discussed to ensure a consistent approach.


The Committee proposes to launch a process to set targets by asset class for increased legal, process and product standardisation and to make arrangements to monitor the achievement of the targets.

CESR recommends that if the targets of the standardisation of OTC derivatives are not met, “appropriate mandatory regulatory intervention" should be taken by the new European Securities and Markets Authority.

It also says that the current situation of trading on exchanges or organised platforms is “unsatisfactory” and that greater trading of standardised derivatives on exchanges should be incentivised by regulators, even though it is not mandated at present.

CESR says this incentivisation should take the form of defined industry targets and should be monitored by the industry. If the targets are not met, ESMA will take action to ensure they are achieved.


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