In 2011, the AFM performed an investigation into compliance with the rules concerning post trade transparency when performing OCT transactions in listed shares (shares admitted to the trade on a regulated market).
If a transaction in listed shares is performed outside a regulated market or Multilateral Trading Facility (i.e. Over The Counter or OTC), the trading parties are required by law to publish the transaction details. Post trade transparency is important in particular with respect to OTC transactions, because this generally concerns large numbers. Incidentally, the details of transactions that take place on a regulated market or on a Multilateral Trading Facility have to be published by the Trading Facility concerned.
Towards the middle of 2011, the AFM investigated to what extent the rules for post trade transparency are observed when performing OTC transactions in listed shares. A listed share is a share that has been admitted to trading of a regulated market (for example Euronext Amsterdam N.V.). It has also been assessed whether the transactions were notified (correctly) to the AFM. Thirty investment firms established in the Netherlands participated in the investigation. They provided data on the number of OTC transactions performed and gave their opinion on the quality and availability of post trade information in the Netherlands.
- The majority of the firms investigated complied well with the regulations. Some respondents did not publish (part of) the OTC transactions that were investigated. The same applies to a lesser extent to notifying such transactions to the AFM. The AFM has confronted the firms where shortcomings had been identified.
- The OTC transactions in listed shares that were published provide a correct image of the underlying transaction.
- Publication usually occurs via a data vendor.
- OTC transactions in listed shares are not always notified to the AFM as they should be. For example, over thirty percent of the investigated transaction were not reported as OTC.
In 2011, the European Commission proposed a reform of the MiFID. In order to (further) centralise the availability of post trade information, it was proposed that in the future all investment firms will be required to publish their transaction notifications only via Approved Publication Arrangements. This will make it possible to compare transactions performed in different Trading Facilities (more) efficiently. It is not yet how this will be shaped exactly. For more information, please read the proposal of the European Commission for reform of the MiFID, specifically Articles 61 to 68.
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.