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The vast MIFID rules were designed to make European markets safer, more efficient and transparent, and discourage trading away from stock exchanges. Banks were banned from trading customers’ orders via their own internal trading desks. His comments come as policymakers assess the first six months of the new regime, which affected most parts of Europe’s financial system. France’s influence over future rules is likely to increase after the UK leaves the EU next year. Mr Ophèle said “the jury is still out” on MiFID II and raised concerns about the growing use of so-called “systematic internalisers”. The legal status, little used before MiFID II, allows institutions to trade shares away from the market if they transact customers’ deals on their own accounts. They are more lightly regulated, and standards around smaller trading increments — or tick sizes — and trade reporting are eased.
“The structure of the market is changing. It can’t be done from one day to another, so we need to really see if the price formation is enhanced or not and to ensure that the transparency requirements are revealed.” Along with other issues — such as huge data reporting requirements and the rise of periodic auctions, where investors can place orders at particular prices within a limited timeframe — Mr Ophèle believes that the MiFID II regime has yet to prove itself. “The real issue is, where is the progress, where is the improvement? So that’s why I said the jury is still out because having replaced broker dealers . . . by systematic internalisers, to some extent I’m a bit surprised to see that it could have managed to fill the gap with the old traditional OTC operations,” said the AMF chief.
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