ESMA today published its first Q&A on MiFIR transparency topics which focuses on the double volume caps (DVCs) in equity markets and clarifies how markets can transition to the new DVC regime. The document outlines how to calculate the market share of non-transparent trading for instruments only coming in scope under MiFID II (think ETFs, for example). ESMA will make the assumption that these instruments are not traded in the dark at all prior to January 2018, and will gradually phase them into the DVC regime thereafter. Along similar lines, newly issued shares will not be subject to the DVC rules for the first 12 months after MiFID II go-live, allowing for sufficient trading data to be collected.
ESMA's clarification on these two points will no doubt be welcomed by the industry as it looks to transform the "clunky" DVC regime into something remotely workable.