Application of MiFID II/MiFIR provisions to CME Group Markets

# Topic and Scope Application to CME Europe market Application to CME U.S. markets (DCMs) Application to EU based investment firms trading on CME markets (CME Europe market and CME U.S. markets (DCMs))
1. Transaction reporting Yes.

 

Operators of EU trading venues must report details of transactions in financial instruments executed through their systems by entities not subject to this requirement directly.  

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe, and potentially where trading on CME’s DCM markets. 

 

Direct requirement on EU investment firms to report trades in (i) financial instruments traded on an EU trading venue, (ii) financial instruments where the underlying is financial instrument traded on an EU trading venue, or (iii) financial instruments where the underlying is an index or basket composed of financial instruments traded on an EU trading venue.  MiFID II requirements may apply to an EU investment firm’s activity on a US DCM where (ii) or (iii) above are met.

 

2. Algorithmic trading/HFT Yes.

 

Operators of EU trading venues must impose certain controls on their members/participants who trade using algorithmic/HFT techniques.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe only. 

 

Direct requirement applicable to EU investment firms and certain other member firms using algorithmic/HFT techniques when trading on a EU trading venue. Additional requirements apply if the firm pursues a market making strategy on an EU trading venue (as defined in the regulatory framework). MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM.

 

3. Clearing/indirect clearing obligation Yes.

 

Operators of EU trading venues must ensure all derivatives listed on that venue are cleared through an authorised or recognised CCP.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe (and clearing via CME Clearing Europe). 

 

Direct requirement on EU investment firms acting as clearing members of an EU CCP regarding systems, procedures and arrangements incl. timing requirements on submitting and accepting trades for clearing.  Indirect clearing must set meet conditions. MiFID II requirements do not apply to an EU investment firm acting as a clearing member of a US DCO. Note: EU investment firms acting as general clearing members are also subject to requirements. These apply whether those clients are EU/non-EU and irrespective of where the cleared trades are executed.

 

4. Trading obligation No.

 

Applicable only to counterparties to an OTC derivative trade.

 

No.

 

Applicable only to counterparties to an OTC derivative trade.

 

Yes – CME Europe and CME’s DCM markets available to satisfy the EU trading mandates. 

 

All EU entities subject to the clearing obligation under EMIR are required to trade derivatives declared subject to the trading obligation on an EU trading venue or equivalent third country trading venue.

 

5. Position limits and position management controls Yes.

 

Operators of EU trading venues will have position limits set by the national competent  authority for relevant  commodity derivatives that trade on the venue.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe. 

 

Direct requirement on EU investment firms and other firms trading commodity derivatives on a EU trading venue or economically equivalent OTC contracts (exact scope TBC). MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM (US position limits apply where relevant).

 

6. Position reporting Yes.

 

Operators of EU trading venues will have position reporting set by the national competent authority for relevant commodity derivatives that trade on the venue.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe. 

 

Direct requirement on EU investment firms and other firms trading commodity derivatives on a EU trading venue or economically equivalent OTC contracts. MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM.

 

7. Pre-trade and post trade transparency
(relevant for package transactions, incl. EFRPs and Large In Scale (LIS), i.e. blocks)
Yes.

 

Operators of EU trading venues must: Pre-trade: make public current bid/offer prices and depth of trading interest for derivatives traded on the venue. Post-trade: publish price, volume and time of transactions executed. Unless any waivers apply.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

No.

 

Requirement only for the EU venues. Note: EU investment firms may have transparency obligations if they enter into transactions that are traded on a trading venue outside of the rule of the trading venue.

 

8. Direct Electronic Access/ Sponsored Access Yes.

 

Operators of EU trading venues must impose certain controls on their members who provide DEA/ sponsored access to clients.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe. 

 

Direct requirement on EU investment firms and certain other members who provide DEA/ sponsored access to clients for trading on an EU trading venue. MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM.

 

9. Clock synchronisation Yes.

 

Operators of EU trading venues must synchronise clocks used for recording any reportable events and impose certain controls on their members to do so.

 

No.

 

Applicable only to operators of EU trading venues.

 

Yes – where trading on CME Europe. 

 

Direct requirement on EU investment firms trading on an EU trading venue. MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM.                         

 

10.  System resilience and circuit breakers (incl. market making) Yes.

 

Operators of EU trading venues must have (i) agreements with investment firms pursuing market making strategies, (ii) schemes to ensure sufficient number of investment firms provide quotes for liquidity purposes (where applicable), (iii) systems and controls to monitor orders/ reject orders above pre-determined volume/ price threshold or clearly wrong and (iv) systems to halt or constrain trading where there is significant price movement.

 

No.

 

Applicable only to operators of EU trading venues. US requirements apply to CME’s DCM markets.

 

Yes – where trading on CME Europe. 

 

Direct requirement on firms trading on an EU trading venue. Additional requirements apply if the firm pursues a market making strategy on an EU trading venue (as defined in the regulatory framework). MiFID II requirements do not apply to an EU investment firm’s activity on a US DCM.

 


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