Speaking at a seminar at Cass Business School in London, Almunia also said that the ongoing review of MiFID aims to improve the organisation, transparency and oversight of exchange-based trading. Furthermore, MiFID II may extend the scope of the exchanges’ obligation to publish transaction data.
On MiFID II, Commissioner Almunia also said that it may force the unbundling of the sale of pre- and post-trade data so that users will only acquire what they need. The use of common message protocols which do not attract proprietary standards might also be favoured.
The regulatory measures taken by the European Commission will shed more light into the way financial markets operate, and will prevent a dangerous accumulation of risk. But regulation alone is not enough. Whereas regulation tackles broad structural market failures, you need competition policy to tackle the harmful behaviour of individual market participants. Competition control should ensure that the actual evolution of the market does not lead to structures that harm users and legitimate market participants.
Almunia was aware of the debate on inter-operability and the question of whether increased competition and the proliferation of market actors can undermine stability, but he does not see a problem here. He believes that competition and stability are not at odds. If market participants comply with strict prudential requirements, there is no risk in having many of them supplying services to investors.
He said that one of the major problems in wholesale financial markets is market data.
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