EU and UK MiFIR/MiFID II reforms: Navigating the upcoming data challenges

This article was written by Kate Lee, Global Head of Regulatory Data Solutions, Alessandro Puce, Data Product Owner, and Thomas Labbe, Regulatory Data Product Manager at Bloomberg.

Significant updates are coming to European and UK financial market regulation. The European Securities and Markets Authority (ESMA) and the UK Financial Conduct Authority (FCA) are introducing changes to the Markets in Financial Instruments frameworks through the EU MiFID Review and the UK Wholesale Markets Review (WMR) to enhance transparency, streamline reporting, and modernize market structure.

These reviews represent the first significant divergence of requirements between the two MiFIR transparency reporting regimes.

The main changes will affect the respective EU and UK versions of the MiFID Regulatory Technical Standards 2 (RTS 2) covering transparency rules for non-equity instruments. With the exception of the section on the Double Volume Cap, this article focuses on changes affecting non-equity instruments.

Liquidity transparency: From central registers to market judgment

Currently, bond liquidity is calculated by regulators on a quarterly basis and the results are published on the ESMA and FCA FITRS websites for their respective jurisdictions.

ESMA is moving away from this system and instead makes market participants responsible for determining liquidity based on certain instrument characteristics such as bond type, issue size, remaining maturity & coupon type (for sovereigns), currency and ratings (for corporate, convertible and other bonds).

The impact will be very significant, with the number of liquid bonds expected to jump 20 fold to over 24,000. Under the new regime liquid bonds will represent around 88% in number of trades and 95% of volumes. Take for example a benchmark EIB bond 0.75% maturing in April 2026. Currently classified as illiquid it will be considered as liquid under the new regime since the issue size is over EUR 1bio.

The UK FCA has moved one step further by entirely removing the need of a dedicated field for liquidity. This will result in a transparency regime solely based on trade size thresholds.

Transparency thresholds: Two paths, one complexity

The current regime provides a complex system of waivers (for pre-trade transparency obligations) and deferrals (for post-trade transparency obligations). These rely on size thresholds calculated and published annually by the regulators. Namely, these are the Large in Scale (LiS) and the Size Specific to the Instrument (SSTI) thresholds. 

Both regulators are phasing out the SSTI thresholds and moving away from a system that requires them to calculate and publish the relevant transparency thresholds. However, this is the only common ground between the two regimes going forward.

In the EU, bonds will be grouped according to certain characteristics and post-trade deferrals will follow a system that combines the issuance size as a proxy of liquidity of the instrument with the size of the transaction. Price and volume information can then be published within specific time schedules that go from 15 minutes to four weeks.

As a result of the new deferral regime, the number of trades below thresholds (hence need to be reported in real-time) will rise significantly, encompassing 87% to 96% of all transactions depending on asset classes.

Similarly, in the UK bonds will be grouped according to certain characteristics (some of which are the same as for the EU rules) but they follow a more granular grouping. The deferral schedules go from 1 day to three months, according to the size of the transaction. Trades below thresholds will be reported in real time.

Importantly, from next year, the growing volume of liquid instruments and trades reportable in real time will be consolidated and disseminated through single data feeds (Consolidated Tapes) in both the EU and the UK, which will add to the significant transformation that non-equity market transparency will undergo in coming months.

The UK has also finalized the transparency regime applicable to derivatives. The first change is that only certain OTC derivatives will be in scope. This will substantially reduce the number of OTC derivatives in scope of transparency rules in the UK. 

The deferral schedule is such that price transparency is prioritized over volume transparency. This will result in the price information being allowed a deferral of up to one day and volume deferral to laps at end of the following quarter for volume information for larger trades.

Volume caps: Convergence or disappearance?

Dark pool trading has long been governed by volume caps. Under the EU’s MiFIR Review, the Double Volume Cap (DVC), which currently combines a 4% trading venue cap with an EU wide cap of 8% will be replaced with a Single Volume Cap (SVC). Under SVC only 7% of all trading in a stock can be done under waiver without pre-trade transparency requirements. This will be effective as of October 2025.

Meanwhile the UK has already retired volume caps entirely for equities, opting not to replace them.

How Bloomberg can help

As we are transitioning to new regime, market participants will face two key challenges:

1. The divergence between the EU and UK transparency regimes for non-equity instruments.
2. Regulators moving away from publishing the relevant transparency information and instead requiring the market to work out the relevant thresholds and parameters according to the new rules. 

To help clients understand how to classify non-equity instruments in the EU and UK, Bloomberg is updating its MiFID solution to reflect the changes across both jurisdictions. These changes will be made in alignment with the effective dates of EU and UK MiFIR/MiFID II reforms. 

Changes include:

• Revamping existing data fields with new content such as liquidity flag for bonds and waiver suspension fields for equities in the EU.
• Adding new fields that will address LIS thresholds and bond group for EU and UK and category type and sub asset class for determining LIS thresholds for the UK.
• Removing fields that will be obsolete such as liquidity flag and SSTI thresholds for bonds and derivatives for the UK, SSTI thresholds for bonds for the EU.

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