MEPs on the Committee on Economic and Monetary Affairs (ECON) debated, on Thursday 17 November, amendments to legislative proposals revising the Markets in Financial Instruments Directive (MiFID) and the Markets in Financial Instruments Regulation (MiFIR). While many issues seem to be agreed, others —such as payments for order flow— are subject to completely different approaches. More than 400 amendments were tabled.
The revision of the MiFID Directive and MiFIR Regulation aims to provide investors with better access to company data in search of capital and to ensure greater transparency in the financial markets.
As could be expected from the presentation of the report by Danuta Hübner (EPP, Polish (see EUROPE 13040/19), there was broad support for the ‘single consolidated tape’ system. She noted “a clear majority of support among political groups for the launch of the bonds tape as a first tape”.
For equity tape, she found that a majority of MEPs supported the introduction of pre-trade real-time information. But some amendments propose instead to include post-trade information and provide for a later implementation. This is what Nicola Beer (Renew Europe, German) argued for.
A majority of elected representatives also seem to support the idea of excluding small regulated markets from the mandatory data contribution with also a voluntary opt-in mechanism that would offer them a choice if they want to disclose their information.
Ms Hübner noted that there are different views on which data contributors should be included in the equity revenue model. “The view that all data contributors should be remunerated seems dominating. And (that) smaller regulated markets should be receiving a bigger share of revenue seems to be prevalent”, she stressed.
On market structure and transparency, some of the amendments favour a more restrictive approach to equity transparency and systemic internalisers (investment services providers that execute certain client orders outside a regulated market by acting as counterparty to orders). The rapporteur is concerned that the proposed measures will only benefit certain platforms, at the expense of other market participants and the overall competitiveness of markets.
“So we have to look carefully at getting a good balance”, said the Polish Christian Democrat.
Finally, regarding best execution, two approaches are emerging. Some amendments are in line with the European Commission’s original proposal, maintaining the payment for order flow (or ‘PFOF’). However, others go further, by prohibiting payment incentives. An PFOF consists of a broker providing orders placed by its retail clients to a third party for execution, in exchange for a fee.
For Karima Delli (Greens/EFA, French), “the priority is to strengthen the protection of retail investors”, through the strengthening of order execution regimes and clear regulation of commissions charged by distributors of financial products.
To consult the amendments: https://aeur.eu/f/44l; https://aeur.eu/f/44m; https://aeur.eu/f/44n (Original version in French by Anne Damiani)