LONDON Dec 4 Negotiations over sweeping changes
to European Union securities market rules enter what may be the
final stretch on Wednesday with several key elements already
The bloc's Markets in Financial Instruments Directive or
MiFID is being updated to reflect rapid advances in trading
technology and apply lessons from the 2007-09 financial crisis
to stock, bond and derivatives markets.
The European Parliament and EU states have joint say on the
final shape of the law and representatives from both sides have
set aside over six hours to hammer out an outline deal.
In earlier meetings agreement was reached on curbing
anonymous or "dark pool" trading and supervising high-frequency
or ultra-fast trading.
There is also agreement on a new breed of trading platform,
known as an organised trading facility or OTF for trading
off-exchange swaps contracts, the EU's counterpart to the new
U.S. organised trading facilities which are already up and
Wednesday's meeting will seek a deal on remaining
contentious issues, such as who should be responsible for
imposing curbs known as position limits on commodity derivative
markets to stop any one trader holding too much sway.
Policymakers have insisted on such curbs to stop what they
see as speculators pushing up food and energy prices.
Many EU states want national authorities to have the
responsibility but parliament would like the bloc's securities
watchdog, the European securities and Markets Authority (ESMA)
to have the upper hand.
EU presidency holder Lithuania, which will lead negotiations
on behalf of member states, is proposing that ESMA agrees the
rules for setting position limits and member states apply them,
an EU document seen by Reuters said.
"In order to take the experience of the trading venues into
account, it is suggested that position limits would initially be
set by reference to position limits currently in place on the
trading venues," the document said.
Some exchanges have bowed to the inevitable and already
imposed limits and the document said there should be a public
consultation before limits are set by authorities.
The presidency will also back parliament's view that
derivatives positions should be totted up on a net, rather than
the larger gross basis.
Wednesday's talks will try to resolve one of the most
contentious elements of all: open access or allowing investors
who trade on a particular platform to clear the transaction
elsewhere rather than in the platform's own clearing house.
Parliament wants open access put on hold, arguing it risks
splitting up market liquidity and the EU presidency has proposed
a transitional period.
The aim is to reach a broad enough agreement on the
outstanding issues in MiFID, in particular on open access, for
the bloc's member state ambassadors to endorse next week.
Markus Ferber, the German centre right lawmaker who is
leading negotiations for parliament, told Reuters this month he
is planning for MiFID to be completed before Christmas.