MiFID Rollback Weighed by Lawmakers Aiming to Jump-Start Economy
MiFID Rollback Weighed by Lawmakers Aiming to Jump-Start Economy
(Bloomberg) -- European policy makers are taking early steps to relax one of their signature pieces of securities legislation as a way to help the economy recover from the coronavirus.
Authorities in the European Union hope further easing of the MiFID II rulebook in the coming months will encourage firms to invest, trade and raise funds on public markets, according to people with knowledge of the matter and private documents seen by Bloomberg News.
The coronavirus crisis, which has already prompted emergency relief for the financial industry, could now lead to permanent policy change. The revised Markets in Financial Instruments Directive, or MiFID II, has overhauled everything from broker fees to reporting requirements since it was introduced in 2018, but industry groups have long complained about the expense and paperwork burden.
“When many companies need to strengthen their equity base due to the crisis, we should try to get rid of as many obstacles as we can,” said Markus Ferber, a lawmaker in the European Parliament who helped draft the original rules. “Streamlining some of the investor-protection provisions and making them more fit for purpose for a world that relies a lot more on distant communication seems sensible.”
Scaled Back
A softening of record-keeping and disclosure rules would be a win for firms including Deutsche Bank AG and BlackRock Inc. along with dozens of lobbying groups, which have said the requirements are complex and costly to meet.
Clients might be allowed to opt out of mandatory telephone recordings with financial firms, while rules that require standardized costs and charges could be scaled back to only cover retail investors, according to the people, who sought anonymity because the discussions are private. Brokerages might also not have to report as much information on how much they charge clients to trade.
“MiFID II has created some administrative burdens for intermediaries and has made accessing financial markets more complicated for retail clients,” Ferber said in an email.
The European Commission, the EU’s executive arm that is charge of proposing legislation, declined to comment.
Even before the virus struck, authorities across the EU were beginning to consider changes to the legislation. The European Commission began a broad review of the law, asking the industry and public interest groups for feedback by May 18. Deutsche Boerse AG and German banks pressed for amendments in their responses.
Germany has already called for the postponement of a key plank of MiFID II known as open access, which would allow derivatives to trade at one exchange and clear through a rival venue -- threatening the dominance of its domestic bourse.
On Monday, representatives from member states were scheduled to discuss initial thoughts on revising the law with the European Securities and Markets Authority and European Banking Authority.
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