Share trading law on hold

By Anna McLauchlin

Date: 19/01/06

EU rules on share-trading have been delayed at least until the end of January as a result of member states wrangling over how much say Brussels should have in their implementation.

It was spring 2004 when the European institutions thrashed out the bones of the 'MiFID' law - which makes it easier for financial institutions to operate elsewhere in the EU while tighten up trading practices.

The European Commission was supposed to issue more detailed recommendations on how firms should implement the rules on 11 January, as part of the second part of the so-called Lamfalussy legislation procedure for laws on financial services

But the huge file has been beset with problems and member states and MEPs are now arguing over how the recommendations should be published for what is formally known as the directive on markets in financ- ial instruments.

European Voice understands that Commission internal market officials are keen to issue a regulation. But some member states, notably Germany and the UK, are staunchly opposed. A regulation would not fall in line with German civil law and the UK is backing Berlin because a regulation would rob it of the opportunity to tweak the law to suit its own multi-trillion pound financial services industry in the City of London.

The British are unhappy with the strict requirements that a regulation might impose concerning trading shares off the stock market and information to be given to clients. These issues delayed the 2004 agreement as France, which previously banned off-book trading entirely, was reluctant to allow too much flexibility for such trading, and it now appears that Paris may have won its battle to tighten up the rules.

According to sources, the Commission's legal services has advised that there is no legal basis for issuing a regulation for implementing measures, but the internal market department is still keen to keep control of the reins.

Further delays could hinder companies' implementation of the law, which has already been postponed until November 2007.

Guido Ravoet, secretary-general of the European Banking Federation (FBE) said: "While it is regrettable that there continues to be a degree of uncertainty surrounding the final detail of the implementing measures for MiFID, the FBE firmly believes that the quality of legislation should not be compromised by speed. However, in this case what is already a very tight timetable for industry to comply with MiFID appears to be getting even tighter."

Article reports that EU rules on share-trading were delayed at least until the end of January 2006 as a result of a dispute among Member States over how much say the EU should have in their implementation. Some Member States, notably Germany and the UK, were staunchly opposed to the European Commission's plan that legislation should be in the form of a regulation.

European Commission: DG Internal Market and Services: Financial Services: Securities and Investment Funds: Investment services and regulated markets http://ec.europa.eu/comm/internal_market/securities/isd/index_en.htm

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