Central Bank of Ireland confirms compliance with ESMA Guidelines on the Calibration of Circuit Breakers and Publication of Trading Halts (“the Guidelines”)

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Date: 14 September 2017

Under Article 72(6) of S.I. No. 375 of 2017 European Union (Markets in Financial Instruments) Regulations 2017 (“MiFID II”) trading venues are required to be able to temporarily halt or constrain trading if there is a significant price movement in a financial instrument on that venue or a related venue during a short period and, in exceptional cases, be able to cancel, vary or correct any transaction.

Additionally a trading venue is required to ensure that the parameters for halting trading are appropriately calibrated to take into account the liquidity of different asset classes, nature of the market model, types of users and is sufficient to avoid significant disruptions to the orderliness of trading.

Under Article 72(8) of MiFID II a trading venue is required to report such parameters and any material changes to those parameters to the Central Bank in a consistent and comparable manner and the CBI shall in turn report these parameters to ESMA.

Under Article 48(13) of Directive 2014/65/EU ESMA is required to develop guidelines on the appropriate calibration of trading halts.

In this regard, ESMA, following consultation with industry, drafted the Guidelines to develop common standards to be taken into consideration by trading venues in relation to trading halts and to ensure consistent application of the provisions.   

 

The Guidelines provide guidance on:

  • the calibration of trading halts,
  • the dissemination of information regarding the activation of a trading halt; and
  • the procedure and format to submit reports on trading halt parameters from NCAs to ESMA.

The Guidelines will apply from 3 January 2018.

 In accordance with Article 16(3) of Regulation (EU) No 1095/2010 competent authorities and financial market participants must make every effort to comply with guidelines and recommendations.  Competent authorities are required to comply by incorporating the Guidelines into their supervisory practices.

Industry participants are hereby notified that the CBI has advised ESMA of its intention to comply with the Guidelines.

 

More information:

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