Spain has failed to meet MiFID’s requirements since 2008, a cause of growing frustration in the rest of Europe. Spain is home to five of the biggest stocks (Telefónica, Banco Santander, BBVA, Iberdrola, Repsol) on European indices and cannot be so easily dismissed.
There has been progress, some of it due to the growing disquiet of local brokers keen to access the alternative venues prevalent elsewhere in Europe. Much of the progress has been a result of Spain’s six-month presidency of the EU last year. Subsequently, a series of consultation papers proposing market reforms in line with MiFID have been issued by the central bank and the Comisión Nacional del Mercado de Valores, the country’s financial markets regulator. At the same time, Spain’s first home-based MTF, Plataforma Alternativa de Valores Españoles, is scheduled for launch this year.
Jorge Yzaguirre, director of the equity unit at the BME, said MiFID was “fully implemented in the Spanish market” and the BME welcomed competition, but added: “The cost at which competition is taking place is too high, as the liquidity of share trading in Europe is being fragmented.” These sentiments were echoed by the BME’s president, Antonio Zoido, speaking at the presentation of the group’s financial results last month. He suggested that the current review of MiFID should “correct the excessive fragmentation that has occurred”.
Another area of contention is Spain’s post-trade environment. The BME owns and operates Spain’s national central securities depositary, Iberclear, which settles all securities trades. In order to clear trades, MTFs have to request a registration number from Iberclear. The Spanish regulator and central bank have published several consultation papers proposing changes to the post-trade space to bring the country in line with the rest of Europe. In January, the regulator’s proposals focused on new clearing arrangements.
If Spain reduced the cost of trade execution and settlement, local corporates and brokers could benefit from greater interest from international investors. Jenkins at Morgan Stanley said: “Of course, opening up the market would mean the likes of BME and Iberclear would lose market share but that’s the nature of competition. Eventually someone has to say ‘enough is enough’.”
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