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February 27, 2013 1:33 pm
An influential MEP has warned Europe may face a third round of legislation if the region cannot soon agree its much-delayed revision of the dealing rules for banks, brokers and high-frequency traders.
Markus Ferber, a Christian Social Union representative from Germany, said “the window of opportunity is closing” for Europe to pass its review of the Markets in Financial Instruments Directive, known in the industry as Mifid.
Last week further talks between legislators aimed at securing a breakthrough to the legislation, proposed by the European Commission in late 2010, were pushed back to mid-March by Ireland, the holder of the European Council presidency.
For several months Brussels has been focusing on passing legislation for a European banking union, as well as other key financial markets rules such as CRD4, so-called because it is the fourth version of a directive for banks on capital requirements.
The revision of Mifid proposes tougher rules for high-frequency trading and to move more over-the-counter derivatives on to electronic trading venues.
“At the end of the day, the window of opportunity is closing down,” Mr Ferber told the Financial Times. “Mifid is one of the cornerstones of market infrastructure. If we can pass it, we can avoid a discussion of Mifid III, because we have to answer the question of high-frequency trading, and other consumer protection issues. For example, block trade investors can’t be jeopardised by high-frequency trading.”
His comments come as MEPs begin preparations for elections in June 2014. The results may change the composition of the legislative body, which has become more strident in its stances as the sweeping legislation aimed at reshaping financial services is formed.
Mr Ferber was one of the main leaders of a group of MEPs that threatened to reject some of the rules drafted by the European Securities and Markets Authority, the markets regulator, intended to tighten OTC derivatives trading.
A late deal meant the vote was called off but it highlighted how fraught the process of setting technical rules had become in the EU.
Mr Ferber also had few concerns about German plans to implement laws curbing high-frequency nationally, a move that has been interpreted by some market participants as evidence of Brussels’ inability to force through vital markets legislation.
“It clearly has been adjusted from the European parliament. It shows we are on the right track,” he said.
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