MFA Blog

EU Seeks Revised Attempt at MiFID

Posted on January 13, 2014

European Union officials and lawmakers are expected to make another attempt this week to overhaul the bloc’s financial-market rulebook. The EU’s bid to update its Markets in Financial Instruments Directive legislation, known as MiFID, is a key component in the bloc’s efforts to implement agreements reached by the Group of 20 nations in the wake of the financial crises. The updated rules must be negotiated and approved by the EU Parliament and national governments before they can go into effect, which also means that the deal must be agreed upon with members of the assembly and Greece, which took over the EU Presidency at the beginning of the year.

A deal would update existing MiFID legislation from 2004 that focuses mainly on the equities markets, and measures to break down monopolies enjoyed by national exchanges. Michel Barnier, the EU Commissioner for Internal Market and Services, said that updated rules are needed to rein in “speculative trading activities and to improve the structure of the market.” The proposals include the creation of a new type of trading venue, a push for derivatives contracts to be traded on regulated platforms, and curbing of high frequency and commodity derivatives trading.

Sven Giegold, a German lawmaker, stated that “due to a myriad of unresolved issues, including to what extend the revamped law should cover trading in derivatives linked to energy markets and what investor protection rules should be included, it’s totally unclear whether there will be a deal.” Legislators are seeking for the law to cover energy contracts that are traded for speculative rather than hedging purposes, but governments are split over whether the measure goes too far. Legislators and officials failed to come to agreement on the law during a December 18th meeting.

Other issues to be discussed include the setting of rules on how clearinghouses can access trade-feed data from rival service providers and conditions for how non-EU based companies can offers services in the bloc.  Read more about this story online from  from Business Week here.