ESMA set to delay MiFID II calculations in preparation for no-deal Brexit

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ESMA set to delay MiFID II calculations in preparation for no-deal Brexit
10 November 2020 Brussels
Reporter: Maddie Saghir

Image: tanaonte/Adobe Stock

The European Securities and Markets Authority (ESMA) has revealed that it will suspend the publication of essential calculations of the second Markets in Financial Instruments Directive (MiFID II) as part of preparation plans for a no-deal Brexit, following the end of the transition period on 31 December.

As part of the delays, ESMA has said it will not perform the monthly double volume cap (DVC) publications between January and February, due to concerns about the temporary disruption of its IT systems and databases.

ESMA explained that the DVC calculations, will not be published in January and February 2021 and will resume in March 2021.

In addition, ESMA will not perform the calculations for the quarterly systematic internaliser (SI)-determination for equity instruments and non-equity instruments and for the quarterly liquidity determination for bonds scheduled for 1 February 2021.

The calculation and publication of the quarterly bond liquidity and SI determination for equity and non-equity instruments will resume for the next regular publication date on 1 May 2021.

It also noted that UK-related data will be gradually phased out from all ESMA calculations.

The statement explained that UK-related data received until 31 December 2020 in all other ESMA IT systems and registers will – depending on the systems and registers in question – either be removed or remain in its systems and flagged as inactive/no longer valid with a termination date set to 31 December 2020.

Users of ESMA’s IT systems and registers were also informed that the execution of such changes “might not be immediate”.

ESMA warned of disruptions lasting “several days for some systems”, which could result in the “non-availability of the system, both for the submission of data as well as for the publication of the data received”.

The statement from ESMA builds on an announcement made on 5 February last year, as well as two further updates, on how a no-deal Brexit would affect the authority’s databases and IT systems.

ESMA also issued a statement on issues affecting the European Market Infrastructure Regulation (EMIR) and Securities Financing Transactions Regulation (SFTR) as well as its data operational plan.

In July, the European Commission revealed that at the end of the Brexit transition period, the
EU rules of the MiFID framework for investment services and activities will no longer apply to the UK.

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