Navigating the Transition: ESMA’s Second Public Statement on MiFID II / MiFIR Review

On 10 October 2025, ESMA released a follow-up Public Statement clarifying the transitional application of revised MiFID II / MiFIR rules following the legislative reforms enacted earlier in 2024. This Statement (No. 2) builds on the original guidance from March 2024 and addresses several priority areas: commodity derivatives and emission allowance derivatives, the systematic internaliser (SI) regime, the single volume cap mechanism (VCM), and the new transparency regime under amended MiFIR.

Legislative change is here — implementation is still unfolding

In essence, ESMA aims to provide practical direction during the period between legislative entry into force and full technical implementation, while signalling that market participants should anticipate compliance subject to national transposition and final delegated / implementing measures.

This article decodes ESMA’s clarifications, examines implications for firms and trading venues, and highlights friction points requiring attention.

1. Background: The MiFID II / MiFIR Review, and the Need for Transition Guidance

1.1 Reform in brief

In February 2024, the EU adopted amendments to MiFIR (Regulation (EU) 2024/791) and MiFID II (Directive (EU) 2024/790). These reforms sought to strengthen transparency, streamline trading obligations, encourage development of consolidated tapes, and refine access and conduct rules across EU markets.

However, many of the detailed technical standards (RTS / ITS) required to operationalise those reforms remain in development. Until those are finalised and published, a period of regulatory transition is inevitable—hence ESMA’s role in issuing interpretative statements to guide market adaptation.

1.2 Purpose of the second statement

This Statement No. 2 expands on ESMA’s earlier guidance, focusing on key domains that raise practical and legal uncertainty. It addresses:

• How revised position management / reporting rules apply to commodity derivatives and emission allowance derivatives
• Changes to the systematic internaliser (SI) regime
• The new single volume cap mechanism (VCM) for dark trading
• Revised post-trade transparency obligations for bonds, structured finance, emissions, and equities

Importantly, ESMA reaffirms that where national transposition has not yet occurred, the revised rules should apply when implemented in national law.

At the same time, market participants are urged to plan ahead: where possible, they should anticipate compliance, unless ESMA expressly defers a provision.

2. Commodity Derivatives & Emission Allowances: Position Controls & Reporting

2.1 Expanded position management controls

Under the amended MiFID II, the scope of position management controls (originally applied to commodity derivatives trading venues) is now extended also to derivatives on emission allowances.

ESMA notes that in December 2024 it submitted draft RTS to the European Commission to modify those existing position management controls RTS to include emission allowance derivatives.

Until the existing RTS are formally revised, ESMA expects trading venues to begin applying the proposed control logic to emission allowance derivatives, including ongoing monitoring, accountability levels, and limitation mechanisms.

2.2 Position reporting changes

The revised Article 58 MiFID introduces a new obligation: trading venues must publish a second weekly position report to cover option positions.

Expanded Position Controls and Reporting

ESMA has submitted changes to ITS 45 to reflect this new reporting requirement.

To facilitate this, ESMA has published technical specifications (25 September 2025) to guide reporting.

The anticipated go-live date for these new reporting obligations is 1 April 2026.

An important shift: under amended Level 1, investment firms are no longer required to report positions in emission allowances under Annex II of ITS 4.

3. Systematic Internaliser (SI) Regime: Qualitative Test, Not Quantitative

Under the MiFID II Review, the prior quantitative test in Article 4(1)(20) (and associated provisions) for defining a firm as an SI has been removed.

Post reform, firms meeting qualitative criteria for specific instruments may opt into the SI regime.

Those firms will need to register with their National Competent Authority (NCA), ideally following the template in the draft ITS on SI notification (pending formal adoption).

ESMA has accordingly revised or removed several Q&As related to the SI regime (particularly around transaction execution obligations, fund investing instruments, etc.).

This change shifts the design of SI obligations from a mechanical, volume-based regime to one more aligned with business model choice and qualitative criteria.

4. The Single Volume Cap (VCM) Mechanism

One of the more structural changes from the review is the transition from a double volume cap (separate dark and lit caps) to a single volume cap mechanism.

This new VCM intends to limit dark trading for a given equity at a 7% threshold across the entire EU (i.e. a single cap on the overall dark volume share).

However, the Statement notes that adoption timing depends on the publication of delegated / implementing acts; until then, prior caps remain in force under Article 54(3) MiFIR.

ESMA encourages participants to anticipate the VCM’s effect, even prior to formal transposition.

5. Revised Transparency Regime: Bonds, Structured Finance, Emissions & Equities

5.1 Timing and phased application

The new transparency obligations (in amended RTS 1 and RTS 2) generally take effect from 2 March 2026, contingent on their publication in the Official Journal.

For RTS 1 in particular, 20 days after publication, new quoting obligations will apply for instruments defined as “liquid” under revised tables in Annex II (Tables 3 and new Table 3a).

While the delegated acts are pending, ESMA encourages market participants to anticipate applying the forthcoming transparency rules as of 2 March 2026.

5.2 Transitional application of existing delegated acts

Under Article 54(3) MiFIR, the existing delegated acts remain applicable until they are formally replaced.

ESMA emphasises that during the transition, participants should refer to ESMA’s Q&A and the Interactive Single Rulebook, which will be updated when new rules enter force.

6. Practical Implications & Key Observations

6.1 Anticipation over deferral

Although full implementation hinges on Level 2 / Level 3 standards, ESMA’s tone suggests that market participants should move early in aligning systems, processes, and policies to the forthcoming regime.

6.2 Risk of fragmentation during transition

Because national transposition may occur at different paces, disparity among member states could emerge: some firms may be under old rules, others under new.

6.3 Operational burden in reporting & compliance

The new reporting obligations (e.g., second weekly option positions) demand changes in data architecture, system interfaces, and submission protocols.

6.4 Strategic decision on SI participation

Firms must re-evaluate whether opting into the SI regime makes strategic sense, given qualitative criteria and obligations associated with transparency and quoting.

6.5 Dark trading and liquidity dynamics

Adoption of a universal dark cap (VCM) might shift volume to lit venues—affecting market structure, liquidity, and execution strategies.

7. Preparatory Steps & Recommendations

1. Gap assessment: Compare existing compliance frameworks to the future regime’s requirements in position controls, transparency, SI status, and volume caps.
2. System upgrades: Build or procure reporting modules to support new weekly position reports and transparency outputs.
3. Legal review: Reassess trade documentation, transaction reporting contracts and SI opt-in templates.
4. Stakeholder dialogue: Coordinate with trading venues, counterparties, and NCAs to understand local transposition timelines and expectations.
5. Mock testing: Run internal dry runs for position control triggers, SI notification templates, and dark cap limits ahead of live enforcement dates.