The European Commission has published three letters informing the European Securities and Markets Authority (ESMA) about its decision to endorse draft regulatory technical standards on the non-equity transparency, the ancillary test and position limits provided that certain changes are made.

The first letter refers to Articles 9 and 11 of MiFIR and says the Commission intends to endorse the ESMA standard on transparency requirements in respect of bonds, structured finance products, emission allowances and derivatives once certain amendments are introduced. It says the Commission supports ESMA's approach to the standard – with the caveat that more caution and a slower implementation is needed in certain areas. These areas are the definition of market liquidity and determining the waiver threshold.

The second letter refers to Article 2(4) of MiFID II (on the criteria to establish when an activity is considered to be ancillary to the main business) and informs ESMA that the Commission “intends to endorse the standard on ancillary activities once certain amendments are made”. The letter goes on to state “in the areas set out below, the Commission considers that in the absence of comprehensive trading data, the ESMA's proposal for the main business test on the basis of the total turnover as a proxy to commercial activity may result in an overly restrictive application of the test. Until such data is available, it would therefore be justified to take a more cautious approach for the calibration in the initial years.”

The third letter also refers to Article 57(3) and (12) of MiFID II (on the application of position limits to commodity derivatives). The letter states that the Commission “intends to endorse the ESMA standard on position limits only in case certain amendments are made”. It goes on to state that ESMA's approach “may not be sufficiently nuanced to allow for an effective system of position limits that would be justified for certain types of very liquid or illiquid commodity derivatives”. It also lists several areas in which amendments are necessary.

The letters were not dated and were addressed to ESMA chairman Steven Maijoor and signed by Olivier Guersent. This is the latest development in the attempt to reach a final agreement on the regulatory technical standards (RTS) on MiFID II. In a response to a letter from the Commission in March, ESMA acknowledged the “complex and extraordinary” nature of the MiFID II project. The deadline for for the Commission to decide whether to endorse the RTS on MiFID II was at the end of 2015.