ECON to decide on MiFID II in early July
The European Parliament’s Economic and
Monetary Affairs Committee (ECON) will finalise its amendments to MiFID II by 10 July,
setting out its stance on key trading and market structure issues.
The ECON meeting follows the submission of
MEP’s individual amends to MiFID II, based on prior meetings and an initial set
of proposed modifications to the European Commission’s October 2011 draft of
MiFID II by Markus Ferber MEP.
Ferber is tasked with leading ECON’s review
of MiFID. A number of the German MEP’s initial amendments – particularly those
on market access and the treatment of broker crossing networks (BCNs) – caught
a number of market participants by surprise. Ferber proposed recategorising
BCNs as multilateral trading facilities or systematic internalisers, shunning
the organised trading facility (OTFs) category introduced in the Commission’s
MiFID II draft.
OTFs were designed as a venue type that
would allow their operators discretion on how orders are matched, while
imposing transparency requirements that have hitherto been lacking for BCNs.
Although he did not support the use of OTFs for equities, Ferber did back their
use for other asset classes, including OTC derivatives that will be traded on
exchange-like platforms after the implementation of the European market
Ferber also wanted to ban direct electronic
access to markets, minimise the amount of OTC equity trading and laid out a
definition of when a trading strategy could be defined as high-frequency
MEPs have moderated some of Ferber’s
suggestions in their individual amendments. These have included a fine-tuning of the HFT definition, the reintroduction of OTFs for equities, a clearer
definition of when OTC trading should be allowed and a ban on access markets without
pre-trade risk controls, as opposed to a complete ban of electronic access to
After the MEPs have agreed a common
position, the Council of the European Union, comprising member states’
financial ministers, will be required to do the same. The Council began its
reading of MiFID II last month. Final adoption of MiFID II is expected in 2014.