In anticipation of next week’s trilogue negotiations, financial markets and asset and fund management associations have asked policy makers to work to avoid suboptimal outcomes for the Markets in Financial Instruments Directive (MiFID/R).
The statement, issued by the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), and the German Investment Funds Association (BVI), advises policy makers to take an “evidence-based, ambitious approach”.
They explain that the MiFID/R review is an important part of the Capital Market Union’s (CMU) completion, allowing for EU capital markets to be globally integrated and competitive. If this is not achieved, and if a market infrastructure designed to stem investment flows leaving the EU is not established, the region could be at a disadvantage to other markets, the associations warn.
Market liquidity in EU equity markets is a key issue to be considered, the statement says, along with consolidated tape in these markets. The potential of corporate and sovereign bond markets in the EU is also highlighted as an important area for policy makers to consider, which need a well-calibrated transparency framework.
In addition, new rules could have a negative impact on market liquidity for EU bond deferrals, the statement warns, reporting that “the current proposed calibration ignores the fact that price and volume deferrals should be aligned, especially for the larger, less liquid trades.”
Finally, the associations state that although the strengthening of data protection is a welcome development, proposed changes still allow for value-based pricing of data. The removal of this would promote better outcomes for both investors and the general public, it affirms.
