Published at 25 March 2020, Official Gazette 2020, number 102
This decision amends the Decree on regulated markets under the Wft (BGM) and the Decree on the implementation of EU regulations on financial markets. The amendments to these Decisions stem from two specific parts of the Prudential Supervision of Investment Firms Directive (Directive) and the Prudential Requirements for Investment Firms Regulation (Regulation). These parts of the Directive and Regulation concern amendments to the Markets for financial instruments 2014, respectively the Regulation on markets in financial instruments and relate to trading units. An implementation period for these components will expire on March 26, 2020.
The Directive and Regulation together form the revised prudential framework for investment firms. The other parts of the directive will have a longer implementation period, which expires on 26 June 2021 and will also apply from that date. In view of this longer implementation period, the other parts of the directive will be implemented by means of a separate bill and draft decree. The present decision anticipates this.
The amendment to Article 4e BGM included in this Decree implements Article 64 (5) of the Directive. Section 4th BGM, which is based on Section 5: 30d (2) of the Financial Supervision Act (Wft), contains further rules with regard to arrangements for tick units for trading in equity instruments (equity) and certain similar (equity-like) financial instruments on a regulated market. The tick size is the minimum difference between two price levels of the orders placed in an order book in relation to a financial instrument. In order for the matching of orders of considerable size (large-in-scale orders or LIS orders) to take place in a more efficient manner, the new Article 4 (2) BGM stipulates that the application of tick-size regulations should not prevent markets from matching such orders on the average of the spread of the current bid and ask (mid-point) prices. When matching LIS orders at mid-point, buyers and sellers share the costs of executing their transactions among themselves. The extent of these costs is largely determined by the spread (the difference between the current bid prices and ask prices). If it is not possible to match LIS orders at mid-point, the number of transactions related to LIS orders may decrease because buyers will not always be willing to offer the asking price (the price at which the seller is willing to sell) to pay.
The aforementioned amendment to Article 4e BDM refers to one-to-one implementation of Article 64 (5) of the Directive. This part of the guideline also leaves no room for policy choices.
The amendment to the Decree Implementing the EU Regulations for the Financial Markets incorporated in this Decision incorporates the amendment to the Markets in Financial Instruments Regulation (MiFIR) introduced under Article 63 (3) of the Regulation. MiFIR includes a new Article 17bis, which - in summary - stipulates that investment firms with systematic internal settlement must apply tick-size schemes that are in accordance with the tick-size schemes applied by (multilateral) trading platforms. Article 17a ensures that, with regard to the application of tick-size schemes, there is no longer an uneven playing field between investment firms with systematic internal settlement and trading venues. The amendment of the Decree implementing the EU regulations on financial markets ensures that Article 17a can be adequately enforced.