17 February 2012

ECON Committee first exchange of views on MiFID II/MiFIR

The Rapporteur Markus Ferber said that the two proposals, MiFID/MiFIR 2 presented a strategic review revision and were a core piece of financial markets regulation in order to respond to technical developments, new market participants, and developments on the financial markets since the implementation of MiFID 1 in November 2007.

He explained that in the interest of transparency these contributions were available online. He commented positively on the Commission proposal and highlighted inter alia the following issues: the provisions strengthening investor protection, the fact that more EU rules would integrate the various national market and pre-empt cross border regulatory arbitrage, the need to examine issues related to commodity derivatives trading as well as algorithmic trading issues, and the role of ESMA.

He expressed doubts about the need to create a fourth organised trading system, the so called 'Organised Trading facilities' (OTFs), and stressed that data protection issues would need to be further examined. He concluded that the implementation of this legislation would require an important number of delegated acts in addition to some implementing acts and a number of technical standards, and stressed that it was important to examine the proposals as legislators carefully and hoped that ECON would conclude its work before summer and start negotiating with the Council in September.

In the subsequent discussion, Mr Goebbels (S&D, LU) said it was important to find a wide consensus on this legislation and shared various concerns highlighted by the Rapporteur. He stressed his main concern of reconnecting financial markets with the real economy and said that by reducing the lack of clarity surrounding financial transactions, markets would be safer. He regretted that the Commission proposals lacked ambition, did not address existing loopholes or even create new ones. He did not support the creation of OTFs, and stressed the need for more transparency in OTC trading. He also said that it was not entirely clear that high frequency trading was actually contributing to the liquidity of the market.

Mr Schmidt (ALDE, SW) stressed the need to have broad consensus on such an essential piece of legislation and proposed that the arguments put forward for the creation of OTFs be examined carefully. He was in favour of greater transparency and investor protection. He called for balanced solutions so that markets could be trusted.

Ms Swinburne (ECR, UK) said that the investor community wanted to have a level playing field as well as choice on where to trade. She said that since there was not any clear consensus on applying MiFID's objectives on non-equity markets, interventions had to be proportionate in order not to disrupt their functioning. She agreed with the need to regulate OTC further but wanted to examine more data on the issue of liquidity and high speed trading (HST).

Mr Canfin (Greens/EFA, FR) proposed making a distinction between derivatives and bond markets as well as shares markets. He welcomed the widening of the scope to emission allowances which should not be seen as a purely financial instrument. He stressed that long-term investors were the ones losing out, as HST, although not contributing to the real economy, was reducing their profits, so that this clearly called for creating a more level playing field.

Mr Kute (GUE/NGL, DE) reiterated that the financial sector had to serve the real economy and that ESMA capacities had to be expanded. He also regretted that the proposal did not address adequately the issue of commodity speculations.

Mr Hökmark (EPP, SW) considered that in view of imbalances in the global economy there was a clear need to have dynamic financial markets along with the necessary transparency and competition.

Ms McCarthy (S&D, UK) said it was necessary to ensure less complexity and fragmentation in order to have less potential for abuse.

Mr Giegold (Greens/EFA, DE) spoke about the structures for incentives for financial advisors which were detrimental to consumer protection. The Chair considered that the issue of fund management fees had to be tackled.

Timetable:

• Draft report: 16 March 2012
• Exchange of views: 24 and 25 April 2012
• Deadline for tabling amendments: 10 May 2012
• Consideration of amendments: 18 and 19 June 2012
• ECO vote: July
• EP Plenary vote: September.

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