Writing for the FT, Stafford asks: Could momentum be building to finalise Europe's long-delayed markets legislation, colloquially known as MiFID?
Executives and lobbyists in Brussels are talking about a critical point being reached. There are European Parliamentary elections next May, meaning that many deputies will become distracted by their own election campaigns from February, if not before. Added to that, the current Irish presidency, which runs out at the end of June, may be the last hope for the negotiations. The next six-month presidency goes to Lithuania, which, even with the best will in the world, may struggle to reach compromise. Ireland, with one of Europe’s more sophisticated financial markets, has the regulatory knowledge and a high level of self-interest. As a result, Ireland has been leading a renewed push in Europe over the past month to get an agreement.
In the next two weeks, there are meetings of European Council working groups and national ambassadors that are likely to determine whether key states like Germany, France and the UK come to some sort of agreements on the long-delayed MiFID. That could move the process to trialogue. Key European representatives from the commission and the parliament head to Washington in July, which will hopefully go a long way to thrashing out the key issue of the extraterritorial reach of US and European legislation.
The alternative? MiFID gets significantly delayed, possibly by as much as a year. One senses that this unpalatable outcome – and the likely heavy diplomatic pressure from other regulators around the world – will be a deciding factor.
So the current state of play on the key issues becomes critical. Some things seem to have remained fairly constant in the endless drafts. There will be clampdowns on “high-frequency” trading; all asset classes will fall under the regulation, except foreign exchange; banks will no longer be able to operate their own internal broker crossing networks.
On one issue, the regulation of dark pools, some agreement seems to be forming. Recent circulated drafts of MiFID have talked about a cap on the volume of trading in dark pools in Europe. Lobbyists tell the author that the UK has largely accepted there will be one, and the discussions now are focused on the threshold.
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