The manager of Norway’s Government Pension Fund Global (GPFG) is warning that the European Securities and Markets Authority’s (ESMA) should ditch additional wording on negotiated transactions in a key piece of regulation, saying the amendment was not consulted on, and could harm the competitive marketplace for equity transactions in Europe.

Norges Bank Investment Management (NBIM) has written to the European Commission, warning against the extra clause ESMA plans to add to Markets in Financial Instruments Regulation (MiFIR).

In a letter to the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) in Brussels, NBIM referred to ESMA’s recently-released final report on equity transparency (RTS 1 and CDR 2017/567).

Among changes and clarifications to the Level 2 provisions on equity transparency, the report presented an amendment to Article 5 on transparency waivers for negotiated transactions.

“This amendment was not covered in the consultation process undertaken by ESMA,” it said, in the letter entitled The characteristics of negotiated transactions.

The extra wording NBIM is taking issue with restricts privately-negotiated transactions subject to the transparency waiver to those that take place “without the assistance of a system or trading protocol operated by a trading venue”.

“We believe that this new amendment, introduced without due process of consultation, has the potential to adversely affect the competitive marketplace for equity transactions in Europe,” NBIM said in the letter signed by Emil Framnes, global head of equity trading and transition, Vegard Vik, lead market structure and strategy and principal researcher Simon Emrich.

ESMA’s proposal would effectively deny investors in European markets access to the financial innovations represented by multilateral percentage of volume (POV) or “trajectory crossing” venues, which enhance market quality, the GPFG’s manager said.

NBIM said it had benefitted from these financial innovations in both the US and the UK.

“Regulation should not disadvantage European firms facing international competition,” NBIM said.

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Rachel is IPE's Nordic correspondent. She has long been a freelance writer, and over the years, has written for The Telegraph, The Independent, The Observer, AMWatch and elsewhere. In 2001, Rachel's personal finance book Kickstart Your Money was published by John Wiley & Sons.View full Profile

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