* Final rules to be negotiated with lawmakers
* Rules introduce limits on commodities positions
* New breed of derivatives platforms to be created
* Rules allow EU to catch up with United States
By Huw Jones
LONDON, June 13 European Union states struck a
deal on Thursday to overhaul the bloc's stock, bond, derivatives
and commodities markets, an EU official said, ending a near
Ambassadors from the 27 member states meeting in Brussels
agreed to update rules known as MiFID to catch up with trading
technology and plug supervisory gaps highlighted by the
financial crisis four years ago.
"There is in substance an agreement to be confirmed by
ambassadors on Monday," an EU official close to the talks said
on condition of anonymity.
Progress on the draft law that was proposed in October 2011,
had been deadlocked as demands from Britain, Germany and France
split members states into opposing camps.
"It's been done. The deal is sensible," an EU member state
The updated MiFID rules will create organised trading
facilities or OTFs, a new breed of trading platforms for
derivatives which are currently traded privately among banks.
It follows a pledge made by G20 leaders in 2009 at the
height of the crisis to make the $630 trillion market for credit
default swaps, interest rate swaps and other off-exchange traded
derivatives more transparent.
The United States has finalised rules for its own version of
OTFs to rival existing exchanges.
"OTFs will give new players and market participants an
additional incentive to use this less regulated environment,"
said Judith Hardt, secretary general of the Federation of
European Securities Exchanges (FESE).
The rules seek to crack down on what critics see as
speculation pushing up food and energy prices.
There would be mandatory limits on positions in copper,
coffee, oil and other commodity markets to stop undue influence
Member states also want to introduce an EU-wide cap on dark
pool, or anonymous trading, for the first time along with other
restrictions on less-transparent trading.
"This looks like having a pretty fundamental impact on
brokers' workflow and that they will bear the brunt of the
consequences, intended or otherwise," said Steve Grob of
Fidessa, a trading infrastructure supplier.
Member states agreed to allow competition in clearing
derivatives. Though Germany, fearing it will be negative for
Deutsche Boerse, secured a review by regulators first
to check the "open access" won't increase risks in markets.
The bloc's finance ministers are set to rubber-stamp the
deal when they meet in Luxembourg on June 21.
Afterwards, EU states will sit down with the European
Parliament to thrash out a final text for a law that will take
effect from 2014 at the earliest. There are already several
points of contention with further tweaks likely.