MiFID II will be introduced on January 3, 2018
Here's how EU regulation affects your listed companies and this is what you need to do
On January 3, 2018 new rules for the securities markets will apply in the EU through the regulation MiFIR and the directive MiFID II, the latter implemented through i.a. the Swedish Securities Market Act. You have already been affected by some of the changes – i.a. the LEI requirement – and we are now writing to inform you of some of the changes that will be implemented in the trading.
CFI and FISN codes
Because of MiFID II, AktieTorget has to report reference data to the Swedish FSA and to ESMA for all traded instruments. Besides the LEI code that you have applied for and submitted earlier this year, additional classification codes are required for each instrument. The so-called CFI and FISN codes are decided by and available through the Central Securities Depository (Euroclear) or National Numbering Agencies. Because the reference data is a prerequisite for trading, AktieTorget wants you or your corporate finance advisor to provide us with the CFI and FISN codes prior to all listings and in conjunction with name changes.
It is important that AktieTorget receives the relevant codes betimes the corporate action, at the latest three trading days prior to the last day including the right to receive subscription rights, or three days prior to the first day of trading.
New rules for determining tick-sizes
In conjunction with MiFID II entering into force, new rules for determining tick-size – the minimum price movement – are introduced. Previously, only the share price was considered, but hence the liquidity band will also be taken into account.
The European Securities and Markets Authority (ESMA) and the Swedish FSA (Finansinspektionen) will do ongoing assessments on the liquidity in each share and will publish estimates from which AktieTorget will decide which tick-size to be applied for each instrument.
Circuit Breakers and Pre-Trade Controls
On January 3, 2018, Circuit Breakers and Pre-Trade Controls will be introduced on AktieTorget. The purpose is to curb excessive volatility and to counter market manipulation.
A Circuit Breaker is triggered when an order deviates to much from the last paid price (Dynamic Circuit Breaker) or the reference price, typically the opening price each trading day (Static Circuit Breaker). When a Circuit Breaker is activated, continuous trading is temporarily halted and followed by an auction, lasting 60-180 seconds, after which trading continues.
Pre-Trade Controls is an automatic function that rejects orders that exceed certain pre-determined volume and price thresholds or are clearly erroneous.
Manual Trades and Iceberg Orders
On AktieTorget, it has previously been possible to report Manual Trades and to place Iceberg Orders. This is still the case but new volume thresholds have been introduced through MiFID II and these thresholds will be implemented come January 3, 2018.
New rules for Liquidity Providers
From 2018, AktieTorget will introduce new minimum requirements for Liquidity Providers and will also monitor that the Liquidity Providers comply with their commitments. When applicable, the Liquidity Provider will also show on each company’s IR page. It makes it simpler, safer and more transparent for investors to trade in companies using a Liquidity Provider.
More information on the levels of Circuit Breakers och Pre Trade Controls, tick-size intervals and volume thresholds for Manual Trades and Iceberg Orders, can be found in AktieTorgets Market Model available on AktieTorgets website.
If you have any questions, please do not hesitate to ask us on firstname.lastname@example.org