On Thursday 29 June, negotiators from the Council of the European Union and the European Parliament reached an Interinstitutional Agreement on the revision of the ‘MiFIR’ and ‘MiFID’ texts, which govern the EU’s markets in financial instruments (see EUROPE 13181/23).
“I am delighted that we have reached a political agreement on this revision, which will bring greater transparency and make market data more accessible. A more transparent and accessible financial market will improve the conditions of competition between investors and strengthen the EU’s international competitiveness, to the benefit of businesses and citizens”, said Swedish Finance Minister Elisabeth Svantesson.
The provisional political agreement, which still has to be formally adopted by the European Parliament and the Council of the EU, provides for the establishment of ‘consolidated tapes’ or centralised data flows at EU level for the various types of assets, with the aim of putting an end to their dispersal across multiple platforms, such as stock exchanges or investment banks.
Market data from all trading platforms will be included in ‘consolidated tapes’ on which information will have to be disseminated as close to real time as possible. The position defended in particular by the Greens/EFA group, aimed at making access to this information free of charge for academics and civil society organisations, has also been included in the text.
In addition to these provisions, which should make it easier for professional and retail investors to access information such as the price of instruments and the volume and time of transactions, the text plans to impose a general ban on payment for order flow (PFOF). This practice consists of a broker providing orders placed by its retail customers to a third party for execution, in exchange for remuneration.
However, the agreement provides for a temporary exemption, until 30 June 2026, for those Member States where the practice of PFOF already existed. In this case, investment firms could continue this practice, on the sole condition that the PFOF is only provided to clients established in the Member State concerned.
European Parliament amendments adopted on commodity derivatives
The issue of commodity derivatives was also debated at length during the negotiations. On this point, the European Parliament’s amendments have been taken on board. The market authorities could require the suspension of transactions on certain markets in emergency situations, such as in the case of excessive price volatility, following the example of energy on the gas market in 2022.
In addition, the European Commission is due to submit a report in 2024 on the conditions under which companies in the agri-food or energy sectors are authorised to operate on the financial markets, in order to subject them to the same rules as financial companies.
A year later, in 2025, the Commission is due to issue another report on the limits that should be imposed on traders in the food and energy markets. This report could serve as a basis for a future legislative proposal from the Commission.
“For our group, it was imperative to take advantage of the revision of these texts to limit speculation on raw materials, at a time when our fellow citizens are suffering from price rises partly caused by speculators. The battle is not over, and will continue into 2024 and 2025”, said French MEP Karima Delli (Greens/EFA).
However, while her group described this provisional agreement as “a victory for environmentalists in the face of excessive speculation”, Ms Delli also regretted “the insufficiently ambitious provisions concerning ‘dark trading’ and the regime applicable to Systematic Internalisers”. (Original version in French by Thomas Mangin)