LONDON: A battle over the rules governing Europe’s stock, bond, commodities and derivatives markets rachets up next week when the EU’s financial services chief pushes for stricter controls which some member states say risk driving business away.
European Union commissioner Michel Barnier fired a first shot last month when he warned the European Parliament and member states not to dilute his sweeping reform of the bloc’s securities trading rules known as Markets in Financial Instruments Directive or MiFID.
Barnier said opaque markets like derivatives helped deepen the financial crisis of 2007-09. Industry officials say too much transparency will make it costlier for institutional investors to trade, as others in the market would see their position and trade against it.
Britain, by far the EU’s biggest securities market, will be vigorously defending the City from any intervention which it thinks will drive investors to other parts of the world.
‘Dark pool’
Parliament and EU states will meet next Thursday to decide how transparent trading should be, and who should be in charge of capping trading positions in commodities. They agree that “dark pool” or anonymous, off exchange share trading should be curbed but have yet to decide how.
The lawmakers propose reducing some of the existing exemptions to publishing prices in advance of trade, while EU states prefer some sort of cap on dark trading volumes. Barnier has proposed combining the two in a double crackdown, an EU paper seen by Reuters showed.
Member states meet on Monday to prepare for the negotiations and Ireland, the Netherlands, the Czech Republic and Slovakia signalled their opposition on Friday in a joint response.
Although the final decision on the law rests solely with the lawmakers and member states, the industry worries that Barnier’s intervention could tip the balance in favour of slightly tougher rules than had been anticipated.
Reuters
