Global

Details

  • Industry: Financial Services
  • Type: Regulatory update
  • Date: 6/26/2013

Trading rules breakthrough 

After months of delays a sudden breakthrough in Europe's new trading rules caught many in the industry by surprise. The big step forward came from Finance Ministers who reached a deal after months of clashes over issues such as pre-trade transparency, open access to trading venues and restrictions on dark pools.

The deal puts pressure on MEPs to agree or risk delaying the rules coming into force in 2015. Markus Ferber MEP who leads on negotiations for the European Parliament wants to see an agreement reached over the summer.


Revising MiFID is a major part of Europe's response to the post-crisis G20 commitments. The changes impact widely across banks, exchanges, high-frequency trading and commodity trading. In summary areas for final agreement include:


  • Enhanced transparency, limits on 'dark pool' trading and new trade transparency regime for non-equities markets
  • Introduction of a new type of trading venue, the Organised Trading Facility (OTF)
  • Access to capital markets for small- and- medium sized enterprises
  • Non-discriminatory open access to trading venues and central counterparties
  • Safeguards over algorithmic trading or high speed trading
  • Stronger investor protection
  • New rules on corporate governance and managers' responsibility
  • Enhanced framework for derivatives markets

Uncertainty remains over where third country equivalence requirements will end up as Finance Ministers appear to have backed down on supporting the tougher requirements the European Commission wants. As it stands the Finance Ministers deal would see the existing country by country approach continuing which would lose some of open market benefits of the Commission's proposals. However, there are standards in place for third country firms servicing retail clients. These firms will have to set up a branch in the Member State in which the retail clients reside.


Next steps will see intense negotiations over the summer with trialogue discussions between EU institutions over the autumn and a deal likely by the end of the year.


For further information, please contact:

Jon Hogan

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