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Karel Lanoo from CEPS presented the initial objectives of “MiFID I” and its successes and failures. In 2004, “MiFID I” abolished the monopoly of stock exchanges and introduced more competition. According to Lanoo, the main failure was the lack of data consolidation provoked by market fragmentation. When asked for his opinion on the possible merger between DB-NYSE, Lannoo said that it will create a monopoly on OTC derivatives and also on the clearing side. The key issues will be to define the relevant market, the world or Europe.
Thierry Philipponnat, from Finance Watch, stressed that transparency should be central in financial services regulation, and presented many statistics to prove that a high share of European securities transactions are OTC transactions. Concerning HFT, he believes that a distinction should be made between HFT that creates volume (bad) and the kind of HFT that only creates liquidity (good). Despite the good intentions of MiFID I, it could be said that the key objectives were not fulfilled. He also questioned the utility of OTFs and said that the definition of OTC in MiFID II should be strengthened.
Verena Ross, Executive Director of ESMA, presented the following points:
Verena Ross said that it is extremely difficult to define what a hedging transaction is and what speculation is. Regulators and supervisors have struggled to define this for long time but now they will have to try again to define new criteria.
Piia-Noora Kauppi, former rapporteur on MiFID I, warned that ex-ante bans are not the right approach to protect investors. She argued that legal and compliance departments of banks are sufficient to provide the right information to investors.
Dominique Cerruti, President and Deputy CEO, NYSE, called for identical rules for regulated markets and multilateral trading facilities. He stressed that even with the OTF category, there will be new types of platforms that will arise to circumvent OTFs. Cerruti agreed that a more stringent definition of OTC is needed in the MiFID II text.
Mr Heinz-Peter Schlüter, Chair of Supervisory Board of TRIMET Aluminium AG, argued that they need commodities derivatives to cover their business against volatility. Furthermore, trading commodities participants do not pose systemic risk, and expanding further the MiFID II regime to commodities market will increase costs. He warned that small and medium players will be forced to leave the market.
Giselle Henriques, Policy Officer from a Development NGO, highlighted that excessive speculation on food commodities has put pressure on the most poor of the planet. She called for a reform of the financial markets to ensure that there is no more speculation in the food commodities markets. Agricultural commodities should be traded in regulated market and position limits should be introduced. Improved transparency in agricultural transactions should also be mandatory.