Cross-border trading calls for cross-border cooperation among regulators, and tiny financial boutiques with billion euro turnovers should not be exempted, it added. "We need to be very tough on market abuse and market manipulation. Our purpose is to improve and clarify", said Rapporteur Arlene McCarthy (ALDE, UK), presenting her draft report on the proposed legislation
Limiting market fragmentation
Ms McCarthy believes that increased market fragmentation makes it more difficult to detect manipulation, and she won broad support from her colleagues for her wish to remove so-called "organised trading facility" (OTF), category from the Commission proposal. MEPs felt that this category - of facilities operated by investment firms or market players, that bring together buyers and sellers or orders relating to a financial instrument - was not well enough defined and would enable yet another type of player to enter a market that is already complex and hard to control. "It will be nevertheless very useful to have a clear definition of OTF", said Sirpa Pietikäinen (EPP, FI). Wolf Klinz (ALDE, DE), countered that removing the OTF category would contradict the proposal's aim to cover all kinds of financial markets.
SME players must comply with the rules
The idea that small and medium-sized enterprises (SMEs) could be exempted from the market abuse legislation to reduce their administrative burdens was also criticised. "There are small "financial boutiques" with less than 10 employees with a turnover of billions of euros", stressed the Rapporteur. "SMEs that are financial players should play by the rules and principles, to protect investors", she added.
Effective data exchange
Cross-border and cross-venue trading makes manipulation easier to do and harder to detect, so cross-border collaboration and data-sharing among competent authorities should be mandatory, MEPs said. High-frequency electronic trading to take advantage of short-term opportunities, which is large in scale and hard to detect, could also be better controlled by cross-market order book surveillance, they added.
Next Steps
The deadline for the amendments is 24 April and the committee vote will follow in July.
Press release
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