The European Securities and Markets Authority (ESMA) has announced significant updates to post-trade transparency rules as part of its final report on equity markets under Financial Instruments Directive (MiFID II). From 1 January 2026, the collection of certain quantitative data for liquidity assessments will end. Instead, transparency calculations for equity and equity-like instruments will rely solely on transaction reporting data.
This move aims to streamline post-trade workflows and improve the accuracy of data used for regulatory purposes, ensuring more efficient operations across the European Union’s financial markets.
In addition to post-trade changes, ESMA has redefined how liquidity is assessed for equity instruments. Moving away from the previous reliance on free float, the new criteria focus exclusively on market capitalisation. Shares will now be classified as liquid if they meet three thresholds: a market capitalisation of at least €100 million, an average daily turnover (ADT) of €1 million or more, and an average daily number of transactions (ADNTE) of at least 250. This change aims to simplify liquidity assessments and create a more uniform standard across EU markets.
Pre-trade transparency
To improve market clarity, ESMA has revised pre-trade transparency requirements for trading venues. The updated rules will standardise the information venues must disclose, including bid and offer price ranges and the depth of trading interest at those prices. These requirements will be tailored to the specific types of trading systems used, ensuring that market participants have access to consistent and relevant data when making trading decisions.
Systematic Internalisers (SIs) will also face stricter quoting obligations under the revised MiFIR framework. SIs must now publicly display firm quotes that meet newly introduced minimum size thresholds, which will be defined through regulatory technical standards. This change is expected to enhance pre-trade transparency and foster fairer competition among trading platforms, according to ESMA.
