CEPS report assessing ISD Proposal
24 April 2003
Based on the discussions taking place during these proceedings, CEPS has published an independent assessment of the Commission’s ISD-proposal, and more specifically the provisions concerning investor protection and market integrity, a prominent part of which is made up of the much-debated transparency requirements.
Among others the report highlights the dangers of mandating too ambitious levels of detailed transparency requirements and instead proposes to put the emphasis on other methods for ensuring investor protection and market integrity, notably best-execution, conduct of business and post-trade transparency rules.
The report makes six policy recommendations:
EU regulators should stress the overarching aim of promoting fair competition.
The risk of excessive details in a directive that will last for at least 15 years calls for further discussions on the appropriate level of delegation.
The Commission’s decision to impose pre-trade transparency requirements on investment firms appears premature.
Pre-trade requirements should at a minimum be redrafted so that they do not harm liquidity provision.
The rules of best execution, order-handling, conduct of business and conflict of interest rules in combination with post-trade transparency will offer a rigorous regime for protecting investors and integrating markets while preserving the multitude of venues and user choice.
The more educated an investor, the lighter the regulatory touch required. The Commission or CESR should coordinate a process of benchmarking and spreading best practice.
See full CEPS press release
© CEPS - Centre for European Policy Studies
