18 February 2020 | By Michael Thaidigsmann
Brussels ponders reform of securities trading rules
Following the financial crisis a decade ago, the EU imposed stricter rules concerning the securities market. Now, Brussels has launched a consultation in view of a possible adjustment, notably the Markets in Financial Instruments Directive and Regulation (MiFID and MiFIR).
These rules, which are in force since January 2018, were put in place following the financial crisis that hit Europe more than a decade ago. Their aim was to improve investor protection and ensure transparent, efficient and competitive trading in financial instruments, the Commission said.
Overall, Brussels seems happy with the rules, but it plans to make some adjustments to them, namely with respect to investor protection rules. The EU executive said it wants “to strike the right balance between promoting investor participation in capital markets, the competitiveness of the EU’s financial sector and safeguarding the interests of investors.”
The consultation focuses on the possible introduction of a new transparency tool that allows investment managers, advisors and their clients to have access to “live” asset prices across the EU in a consolidated format.
The introduction of a so-called “consolidated tape” (CT) might require changes to MiFID and MiFIR, Brussels said. The CT is single price-comparison tool consolidating trading data across the EU. It is already in use in the United States. A CT could help brokers to locate liquidity at the best price available in any EU market and increase investors’ capacity to evaluate the quality of their broker’s performance in executing an order.
Commission Executive Vice-President Valdis Dombrovskis, who is the commissioner in charge of Financial Stability, Financial Services and Capital Markets Union, said further reform of the directive and the regulation was “an essential component of boosting our Capital Markets Union.”
The consultation has a total of 94 questions. Stakeholders, including EU member states and national authorities, but also EU-based businesses, are invited to submit their views until 20 April 2020.