The European Securities and Markets Authority (ESMA), the EU financial market regulator, has issued a public statement advocating for coordinated action by national regulatory authorities (NCAs) in accordance with the European Market Financial Instruments Directive MiFID II.

ESMA stated in a statement that it hopes that from March 1, 2023, competent authorities in various countries will not prioritize regulatory action on enforcement sites that are obligated to regularly publish RTS 27 reports until the relevant provisions of MiFID II legislation are revised.

According to the MiFID II revision directive, the reporting obligation of RTS 27 is temporarily cancelled and is valid until February 28, 2023. The legislative proposal of the European Commission regarding the MiFID II/MiFIR review includes a proposal to remove the obligation to publish RTS 27 reports, which is currently in the legislative process of the European Parliament and the Council.

Based on existing information, it is unlikely that the legislative process for MiFID II/MiFIR will be completed before February 28, 2023. Therefore, the reporting obligation of RTS 27 may temporarily reapply after February 28, 2023, until the reviewed MiFID II directive applies.

ESMA stated that if the RTS 27 reporting obligation is reinstated after February 28, 2023, the enforcement site will need to deploy significant resources to republish the report and maintain the reporting mechanism, but the duration of this obligation may be shorter.

Why is the RTS 27 reporting obligation cancelled?

Article 27 (3) of MiFID II requires execution venues to provide reports on the quality of transaction execution to the public. The RTS 27 report further specifies the content and format of these reports. According to the MiFID II revision directive, the reading volume of the RTS 27 report is low and it is not possible for investors and other users to make useful comparisons based on the information provided in the report. Therefore, the MiFID II revised directive stipulates that the obligation of the execution venue to publish periodic reports to the public as stipulated in Article 27 (3) of MiFID II shall be suspended until February 28, 2023.