Monitor and Manage: MiFID and Power in the Regulation of EU Financial Markets

Abstract:

MiFID, the Market in Financial Instruments Directive, came into force on 1 November 2007, and is hailed as the next great step toward market integration within the European Union (EU). It is grounded in two key traditional policies of market regulation: surveillance and management. MiFID will exact a greater degree of transparency—paralleling American principles of market regulation. It will also require adherence to a ‘best execution’ standard for all clients. Most analyses have focused on the costs and implementation of these requirements. Transparency is viewed as either a burden (or opportunity) because of the need to produce, keep, and manage more data. Markets in information will surely grow. The ‘best execution’ standards provide a greater means of standardising industry practices—with the potential benefit to regulators to which power over market behaviour should flow.

This article will focus on the potential ramifications of the surveillance and regulatory aspects of MiFID in terms of the nature of the character of the regulatory power in the financial products sector. Specifically the article examines the effects of the creation of the markets for information elaborated or augmented through MiFID in terms of the regulation of the behaviour of participants in financial markets and the entities they serve. Particular attention will be paid to the effects of MiFID on public and private anti-corruption campaigns, the use of these regulations to influence the behaviour of issuers and market middlemen, and the potential utility of these regulations to elements of civil society and the media in their campaigns for corporate and capital social responsibility.

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