ESMA: Let’s Get Transparency Right

  • Transparency under MIFID II has been a failure so far.
  • ESMA is consulting to put this right.
  • We have already lost three years of transparency.
  • This issue is more important now than ever before as the transition to RFRs demands transparency.

I return to work with possibly the most important consultation of the year to respond to.

Full disclosure: we work in the data business here at Clarus! We would love to get our hands on more data.

ESMA Consultation Paper

There is a new ESMA consultation going on right now. Entitled “MiFID II/MiFIR review report on the development in prices for pre- and post trade data and on the consolidated tape for equity instruments” it forms the cornerstone of what we have blogged about in our MIFID II series.

A Timeline of (lost) Transparency

To recap what has happened so far:

  1. January 3rd 2013. Public trade reporting of OTC derivatives begins. DTCC publishes unencumbered trade-level data 15 minutes after trade execution. This is only for US Persons.
  2. January 3rd 2018. MIFID II data arrives in Europe. Anticipated to broadly replicate the availability of data enjoyed by US market participants, including free post-trade OTC derivatives data delayed by 15 minutes.
  3. May 2018. Market participants faced considerable hurdles in accessing trade data. ESMA issued a Q&A to try and resolve the issue. It didn’t work.
  4. September 2019. ESMA issue the latest Consultation Paper and again ask whether data is really being made available free of charge 15 minutes after publication.

Nearly two years after the introduction of post-trade transparency in Europe and OTC Derivatives markets remain as opaque as ever.

What Are They Asking Now?

In this latest Consultation Paper, ESMA ask:

Q12: Do trading venues and APAs comply with the requirement to make available data free of charge 15 minutes after publication? If not, please explain in which areas you have identified deficiencies

Q13: Do you consider it necessary to provide further supervisory guidance in this area

We appreciate the chance to respond to ESMA directly via the consultation so that we can pinpoint precise “deficiencies” and to state unequivocally that “Yes”, “further supervisory guidance” is necessary in this area.


This blog is an advocate for transparency. Below, we lay-out what we think needs to be done so that post-trade 15 minute delayed data can be useful. Remember, we are only talking about post-trade data.

ESMA quite accurately portray the frustrations of all market participants who try to access this data when they state:

Users continue to find it very challenging to obtain the data free of charge from some of the trading venues and APAs. For instance, some entities require to sign complex market data agreements, others continue rendering it impossible to use the information, e.g. by displaying data as an image

ESMA Consultation Paper September 2019

However, ESMA create the problems they are trying to solve by stating:

ESMA agrees that under certain circumstances, trading venues and APAs may be allowed to charge a fee for such data, i.e. in case redistributors charge for the distribution of the data and where the data is used to create added-value services

ESMA Consultation Paper September 2019

This language from ESMA provides enough wriggle room for all the operators of APAs, Trading Venues etc to make their free data effectively useless.

Free data is not public unless it is unencumbered. That is the ONLY WAY to ensure transparency.

Public Data

We would therefore like to see the 15 minute post-trade data made available in a standard format in accessible CSV slice files. This should be free of charge and publicly available. We should not have to lease a data line to get the data. It should be public and its use should be unrestricted.

What Should ESMA be Asking?

“Is the free data publicly available and fit for purpose? That purpose is to provide accurate post-trade transparency in OTC derivative markets across all market participants”

Chris Barnes September 2019

Protecting Vested Interests

There should be no limitation on how free, public post-trade data can be used.

And we believe that the law should explicitly state this.


  1. There is no value in post-trade data from a single source. Therefore a single APA or Trading Venue cannot create revenue from their standalone data.
  2. European Derivatives markets are shockingly opaque when compared to US equivalents. This is because the free public data in Europe is unusable.
  3. Delayed post-trade data is not market-moving. It is mainly used for research purposes and to aid market understanding – i.e. it is truly providing transparency of markets. This should be considered a “public good” and therefore explicitly legislated for.

There may be data firms, such as Clarus Financial Technology, who will aggregate this free, public data into meaningful data sets. We know from our experience that this is both time and resource intensive. It takes specialists in both the products and the data to achieve it. It is complicated which is why very few firms do it, but there is inherent value in independent third parties performing such consolidation.

The free data at the moment is neither public nor standardised. It is therefore very unlikely that a firm such as Clarus will ever be able to provide a viable data product.

As a result, transparency in derivatives markets will remain elusive.

This is music to the ears of incumbent data businesses (who have largely invested to become APAs) but is surely against the spirit of public transparency.

Why Now?

Need we remind anyone that we are about to go through a period of unparalleled change in OTC derivatives as ‘IBORs are phased out?

Public transparency of fledgling markets such as €STR, SOFR and SARON are vital to understand the transition.

ESMA needs to act now so that new RFRs can operate on a level playing field to the ‘IBOR markets.

In Summary

  • Vested interests of incumbent data vendors are too heavily protected under the current wording of ESMA guidance.
  • Post-trade data needs to be published for free and in public to provide true transparency.
  • This free public data finds most utility when it is aggregated in a meaningful way. This is what Clarus do and we believe this substantially adds to transparency in the markets.
  • ESMA needs to provide a platform for that to happen by mandating that public data is free and unencumbered.

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