ESMA finds convergence opportunities for pre-trade controls

The European Securities and Markets Authority (ESMA) has concluded a common supervisory action on pre-trade controls under the Markets in Financial Instruments Directive II (MiFID II). The action aimed to gather insights on how investment firms use pre-trade controls across the European Union. The results showed that most investment firms have integrated pre-trade controls into their trading activity and risk management framework. However, practices related to implementation and governance were often divergent and not always robust. ESMA will analyze the results and publish guidance, including clarifications and best practices, in the coming months. The guidance aims to foster common practices among EU firms in implementing and governing pre-trade controls. The objective is to promote convergence in the implementation of pre-trade controls across the EU. The action was implemented in collaboration with National Competent Authorities (NCAs). ESMA's guidance will provide further clarity on the implementation of pre-trade controls under MiFID II. The regulator's goal is to ensure that investment firms have robust pre-trade controls in place to manage risks effectively. By publishing guidance, ESMA seeks to promote a consistent approach to pre-trade controls across the EU.