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European Union commissioner Michel Barnier fired a first shot last month when he warned the European Parliament and Member States not to dilute his sweeping reform of the bloc's securities trading rules known as Markets in Financial Instruments Directive or MiFID. Barnier said opaque markets like derivatives helped deepen the financial crisis of 2007-09. Industry officials say too much transparency will make it costlier for institutional investors to trade, as others in the market would see their position and trade against it.
Britain, by far the EU's biggest securities market, will be vigorously defending the City from any intervention which it thinks will drive investors to other parts of the world.
Parliament and EU states will meet to decide how transparent trading should be, and who should be in charge of capping trading positions in commodities. They agree that "dark pool" or anonymous, off exchange share trading should be curbed but have yet to decide how.
Member States meet on Monday to prepare for the negotiations and Ireland, the Netherlands, the Czech Republic and Slovakia signalled their opposition on Friday in a joint response. "We do not support inappropriate restrictions on waivers as a means of protecting price formation, especially so where there is no impact assessment to support any such restrictions", they said.
MiFID will also reshape commodities trading but there is no consensus yet on who should have the power to determine caps on trading positions, a new rule backed by policymakers who blame "speculation" on pushing up energy and food prices. EU states want national regulators to police positions while parliament wants the European Securities and Markets Authority to take on this role. The bloc's residency Lithuania has proposed a combination of the two approaches.The presidency is also siding with lawmakers in only including netted trades for totting up a commodity position and is also proposing to apply caps to some types of commodity derivatives traded off an exchange.