Council and Parliament agree on proposal to strengthen market data transparency

The Council has reached a provisional agreement with the European Parliament on changes to the EU’s trading rules that will increase the global competitiveness of the EU’s capital markets and give investors access to the market data necessary to invest in financial instruments more easily.

The revision of the Markets in Financial Instruments Regulation (MiFIR) and the Second Markets in Financial Instruments Directive (MiFID II) aims to empower investors, in particular by making consolidated market data easily available at EU level.

I am glad we have found a political agreement on this review that will bring more transparency and make market data more available. A more transparent and accessible financial market will improve the level-playing field between investors and strengthen the EU’s competitiveness at international level, to the benefit of businesses and citizens.

Elisabeth Svantesson, Swedish Minister for Finance

Consolidated market data

Currently, trading data is scattered across multiple platforms, such as stock exchanges and investment banks, making it difficult for investors to access the accurate and up-to-date information they need to take decisions.

The revision agreed on today will establish EU-level ‘consolidated tapes’ or centralised data feeds for different kinds of assets, bringing together market data provided by platforms on which financial instruments are traded in the EU. This will make it easier for both professional and retail investors to access key information such as the price of instruments and the volume and time of transactions.

Market data from all trading platforms will be included in consolidated tapes, which will aim to publish the information as close as possible to real time. As a result, investors will have access to up-to-date transaction information for the whole of the EU.

Payment for order flow

The agreement reached today imposes a general ban on ‘payment for order flow’ (PFOF), a practice through which brokers receive payments for forwarding client orders to certain trading platforms. Today’s compromise introduces also a possibility to member states where the practice of PFOF already existed to allow investment firms under its jurisdiction to be exempt from the ban provided that PFOF is only provided to clients in that member state. However, this practice must be phased out by 30 June 2026.

Commodity derivatives

The co-legislators also reached an agreement on amendments proposed by the European Parliament on commodity derivatives.

Next steps

Once the text of the provisional political agreement has been consolidated, it will need to be formally adopted by both the Council and the Parliament, before it can be published in the EU’s Official Journal and enter into force.

Background

On 25 November 2021 the Commission presented a package of measures aimed at boosting Europe's capital markets by improving the ability of companies in the EU to raise capital. A key element of the package was a review of the Markets in Financial Instruments Regulation (MiFIR) and the Second Markets in Financial Instruments Directive (MiFID II), which together regulate investment services and financial markets activities in the EU. The aim of the review was to increase transparency on capital markets, improve competitiveness and ensure a level playing field.

The Council agreed on its general approach on 20 December 2022.