The proposed changes to EU rules that could come into effect from next year would deal a shock to multi-trillion dollar markets used to trading beyond regulatory scrutiny.
They would come about as part of a revised law known as Markets in Financial Instruments Directive (MiFID), which will apply across all countries in the 28-member bloc. EU policy-makers are also debating whether the bloc should have a commitment of traders report, as in the United States, to show the proportion of institutions, speculators and commercial players in the market. For decades, over-the-counter commodities trade has escaped regulatory supervision and dealers complain unnecessary scrutiny could kill liquidity.
Diego Valiante, a research fellow at the Centre for European Policy Studies, said the extension of MiFID to include physical contracts, such as forward contracts on the London Metals Exchange or on the oil markets, was not necessarily a bad thing. "Whether this is bad or good it is difficult to say. With some exemptions, it might be the best option at the moment to regulate some highly liquid contracts that are not captured by any regulation at the moment", he said.
A Commission official said the next round of negotiations between the European Parliament, the European Commission and representatives of Member States would be on October 9, with a view to getting a political deal before the end of the year.
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