Scanning the European regulatory horizon: MiFID II, trade surveillance, and the consolidated tape

Key Takeaways

• EU MiFID II Review – industry implementation of incremental rule changes continues.

• UK FCA post-trade transparency changes apply from 01 December 2025, in preparation for the bond consolidated tape.

• Regulation continues to evolve, presenting both challenges and opportunities.

At ION Markets, we are constantly scanning the regulatory horizon to support our customers in keeping abreast of the latest developments.

In November, we welcomed clients to our London office for a Fidessa Regulation for Breakfast event. This was a wide-ranging discussion on the current developments in the European Union (EU) and United Kingdom (UK). We discussed the latest MiFID II changes and were delighted to host Mark Montgomery from xyt, who shared his insights into the consolidated tape from a technical perspective.

Adding trade surveillance to the agenda this time, we also welcomed Enrico Melchioni, Head of Product for LookOut, ION.

In this blog, I share some of the discussion points and the challenges firms are facing.

Latest MiFID II review and regulatory changes

The landscape of MiFID II regulations continues to evolve. A series of revisions and consultations aim to refine and enhance the framework.

A key focus remains on the establishment of a consolidated tape, which serves as a backdrop to the continuing incremental changes.

EU MiFID II regulation updates

Across secondary market participants, the last few months have been a bedding-in period for the revised equity OTC trade responsibility regimes – EU designated publishing entity (DPE) and UK designated reporter (DR). The introduction of the DPE/DR regimes for determining off-exchange trade reporting responsibility means some brokers no longer need to be registered as SIs.

Also playing out is the EU switch from the double volume cap (DVC) to an EU-wide single cap (SVC) on the reference price waiver. One likely outcome of the lifting of DVC restrictions for on-exchange negotiated trades is to move trading away from SIs and back to on-exchange off-book. This move could have the added benefit for pan-European trading firms, of removing the related double reporting of cross-border off-exchange trades (since Brexit).

This is still early days, however. As the revised rules settle in, it will be interesting to follow any market structure impact and changes to trading behaviour.

Key dates and RTS changes

Following on from the consultation-heavy 2024, the awaited publication of the European Commission adopted text finally happened on 03 November 2025. The delay in publication prompted ESMA to issue various reminders of upcoming items to alert participants about changes coming through.

The publication confirmed that the changes to minimum quote size for EU SIs would apply late Nov. Also confirming the date for further RTS1 and RTS 2 changes as 02 March 2026.

Meanwhile in the UK RTS 2 changes apply from 1 Dec. These changes around non-equity transparency, mostly exchange-driven, are to tidy up on post-trade flags and adjust the UK non-equity deferral regime.

Looking at the main topics on the horizon for 2026 these are the progress on accelerated settlement/T+1 and we should expect a lot more on the consolidated tape.

Transaction reporting is also still one to watch following ESMA’s 2024 full consultation around EU transaction reporting. Where the final draft RTS 22 text lands could result in significant changes to the EU transaction reporting regime.

The UK is also looking at transaction reporting. The FCA issued a discussion paper on improving the UK transaction reporting regime in November 2024. The paper set out to form the regulator’s consultative position on the development of a new regime.

The week after the breakfast event the FCA published that consultation (CP25/32) on Improving the UK transaction reporting regime, open for comment until 20 Feb.

Trade surveillance compliance in 2026

Next up was Enrico Melchioni, Head of Product for LookOut, ION to discuss trade surveillance and meeting the challenges in a volatile market. Compliance with the latest regulations is challenging. ION’s award-winning LookOut product equips you to comply with regulations, gives accurate alerts through high-quality data management, and monitors across multiple markets and asset classes.

Cross-asset class monitoring challenges

Trading is evolving and the big challenge is to monitor for suspected abuse across asset classes. For example, it’s becoming more possible to manipulate bond prices via swap curves – we need the surveillance tools to keep up with the tech that allows new types of potential manipulation.

While regulators provide high-level rules, there are some national competent authorities that are more advanced in surveillance techniques, analysing trade data from the various feeds. There are however no prescriptive rules for monitoring cross-asset class behaviours, and it’s up to the firms to meet that challenge. Fortunately (or perhaps not) we haven’t seen many fines handed out for cross-product manipulation.

After the rise in retail trading, regulators are keen to ensure retail users are protected through enforcement of the existing rules. However, the growth in widespread manipulation via social media can be detected but it’s hard to enforce the rules.

Role of AI in trade surveillance

Enrico also shared his experience from a recent XLoD Global event for nonfinancial risk. Leaders from across the three lines of defence from banks and other financial institutions were closely focused on AI. What we learned was that everyone has some kind of AI for surveillance. However, this is not generally used for detection, more for analysing suspicious cases.

AI is also used for summarising alerts, and for making sure that the surveillance system is working properly. It’s widely accepted, though, that humans must still be responsible for any final judgement.

Consolidated tape: Industry perspectives

We were delighted to welcome as our guest speaker Mark Montgomery from xyt, who shared insights on the consolidated tape. Together we looked at various market share charts and agreed that interpretations can differ widely. We also explored the concepts of addressable vs accessible liquidity. It was clear that the term ‘addressable liquidity’ means different things depending on the scenario under consideration.

As we try to make Europe look more attractive to investors, we need to make sure we know how much of the volume is truly addressable.

There was encouragement to everyone to work with the FIX community that is trying to clean up the data using standards. And recognition that industry standards can be a powerful tool. The FIX Market Model Typology (MMT) initiative is a collaborative effort established by industry participants to improve the quality of post-trade data through standards for post-trade transparency.

MMT introduces a standard set of codes for post-trade data, making it easier for market data to be compared and consolidated by investors.

Since the event, the FCA has published their consultation on the framework for an equity consolidated tape, available here. It’s open for responses until 30 January 2026. Market participants are following the progress, and it will be interesting to see how they will respond.

Looking ahead: 2026 regulatory priorities

The ongoing revisions and consultations around MiFID II regulations highlight a dynamic regulatory environment. Firms must stay up to date with all these developments to ensure compliance and leverage opportunities. Market participants must also stay alert to disparate UK and EU requirements and timelines. The journey towards an affordable consolidated tape and improved trade transparency remains a central theme in 2026 regulatory efforts.

Thank you to all who attended and joined the conversation! ION is committed to managing the impact of regulation for our customers and we hope to see you and discuss key issues with you at the next event.