Another kind of movie night

Christian VoigtLet’s face it, a meeting of the Committee on Economic and Monetary Affairs (European Parliament) regarding MIFID II and EMIR is hardly a topic suitable for a movie night. So I wasn’t really that excited to watch their latest discussions on Monday evening in Strasbourg via the internet. However, after seeing the new MiFID movie poster, I was inclined to tune in and watch some Eurocrats in action. Who knows, I wondered, this might be more entertaining than expected and could even measure up to the 1975 classic Jaws!

Boiling down two hours of head to head discussions, I would say the most important points were as follows:

  • The Committee seems unsure what to do with OTFs. On the one hand they fear the race to the bottom on transparency standards in equity markets and an unnecessary increase in complexity. On the other hand, they see the demand for OTFs in non-equity markets which still have a considerable share of voice brokerage (see previous blog Make your mind up!). Some members suggested, as a compromise, introducing OTFs only for non-equity markets. This topic will definitely be hotting up in the months to come.
  • HFT firms will have to significantly increase their lobbying efforts in the face of some strong resistance. Many Committee members questioned whether HFT firms contribute to the real economy and whether they impact financial markets in a positive way. Yes, it seemed that members understood that you cannot regulate innovative technology; however, this does not seem to stop them from making life as difficult as possible for HFT firms.
  • Emission allowances will most likely not be exempt from MIFID regulation, despite some prior discussions. This makes a lot of sense to me. Yes, trading in emission allowance serves a greater purpose and helps to preserve the environment, but many charity organisations also serve a greater purpose and no one is suggesting charities be excluded from the regulation in regard to transparency.

Overall, MiFID II and EMIR still have serious blockbuster potential but hopefully without a Jaws-style bloodbath! Let’s see what the sequel will bring.

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