Avoiding MiFID II?
It should also come as no surprise, as national regulators were propelled towards the cliff edge of this on 3 January, that they decided to blow a sizeable hole in this Brussels turkey. With just hours to go before MiFID II went live, first the German regulator (inevitably), then the British and the French, gave permission to the world’s largest future exchanges and clearing houses to take another 30 months to comply. This fiasco largely leaves the turkey being offered to retail and institutional investors who are supposed to benefit from MiFID II’s voluminous attempt to make research reports independent from broking and other services. The reality is that, yet again, the turkey is inedible. James Bartholomew, in his “Diary of a Private Investor” in the 6 January edition of the Daily Telegraph, summed it up with chilling accuracy when discussing his equity investments. He said: “I investigated most of these companies with the benefit of research from a wide variety of analysts supplied to me by my stockbroker. But earlier this week new regulations imposed by the EU, called MiFID II, came into force. They require brokers and fund managers to pay for research reports instead of getting them in return for putting business their way. My broker has warned me that because of the new rules it will obtain far fewer reports and will probably not be able to let me see them anymore. To put it bluntly, I think this is a violation of personal freedom. It also reduces still further the contact that people should be able to have with the realities of the commercial world. I hope that changes will be made when we exit the EU.”
Brexit and the new Markets in Financial Instruments Directive In case you think that is the grumblings of an insignificant private Brexiteer then hear this from Steve Grob, director of group strategy at Fidessa, which supplies trading, investment and financial software to the world’s financial community. He said:“Two things strike me about MiFID II. First is the enormity of the industry effort involved in getting ready and, second, the almost complete insignificance of it all. Does the man in the street feel that today he has been somehow liberated from the clutches of capital markets? Frankly I doubt it.” In a way we should be grateful to MiFID II because it provides the perfect illustration of how absurd the EU has become and why it is essential for us to leave. It is a breathtakingly inept response to the international financial crash of 2008. Some seven years in the making and all the while assembled by a centralised, largely financially inexperienced army of bureaucrats, accountable to a lightweight parliament in Brussels/Strasbourg made up of second rate national politicians collecting heavyweight salaries and expenses. Then, having been nodded through by the EU parliament, 1.7m paragraphs of rules are foisted onto overburdened national regulators and their regulated, whipped on by an ever more power grabbing gorgon calling itself the European Securities and Markets Authority. Truly the mother of all EU turkeys. Truly a Brexit Thanksgiving.
Read more from The City Grump
- Jean-Claude Juncker: The latest in a long line of European despots
- Britain today: Political pygmies versus Marxist malcontents
- Does it matter that our ex-chancellor ran into the arms of wealthy new bosses? Yes, it does
Share this story