RTS 27 Obligation Would Temporarily Re-apply After 28 February 2023, Says ESMA

The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, is issuing a Public Statement to promote coordinated action by National Competent Authorities (NCAs) under MiFID II. 

ESMA expects NCAs not to prioritise supervisory actions towards execution venues relating to the periodic reporting obligation on them to publish the RTS 27 reports, from 1 March 2023 until the forthcoming legislative amendment to the relevant Article of MiFID II applies.

The Directive amending MiFID II, under the Capital Markets Recovery Package temporarily suspended the RTS 27 reporting requirement until 28 February 2023.  The European Commission's legislative proposal on the MiFID II/MiFIR review includes a proposal to delete the obligation to publish RTS 27 reports. This proposal is currently subject to the legislative procedure at the European Parliament and the Council of the EU. In this context, ESMA has observed a lack of clarity among market participants on the suspension of the obligation to publish RTS 27 reports, if the negotiations by the Council of the European Union and the European Parliament exceeded the expiration date of this temporary suspension (ie, 28 February 2023).

Based on available information, the MiFID II/MiFIR legislative procedure is likely to exceed 28 February 2023. Therefore, it is also likely that RTS 27 reporting obligation would temporarily re-apply after 28 February 2023 until the reviewed MiFID II Directive would apply.

ESMA acknowledges that a re-application of the RTS 27 reporting obligation after 28 February 2023 would require execution venues to deploy significant resources to restart and maintain the reporting, possibly for a short period, until its expected abolishment.

The reason to remove obligations of RTS27

Article 27(3) of MiFID II requires execution venues to make available to the public reports related to the quality of execution of transactions on their venues. The so-called RTS 27 further specifies the content and format of these reports (RTS 27 reports). According to the amending Directive, RTS 27 reports are rarely read and do not enable investors and other users to make meaningful comparisons on the basis of the information they contain. As a consequence, the amending Directive sets out a temporary suspension of the periodic reporting obligation to the public on execution venues in Article 27(3) of MiFID II until 28 February 2023.