Charles McCreevy - EU internal market commissioner - has doubts about the implementation of the 'dream' of a single Europe-wide rule book. Are those doubts justified ?
Speaking at a City event organised by UK Treasury, he admitted that translation of 27 regulators with different level of gold plating of the EU rules will not create a single rule book. On the other hand, looking at the content of the directive, does it really matter ?
The concept of a single market for financial services predates MiFID. The idea of being licenced to operate within the EU (actually within the EEA, i.e. EU plus Switzerland, Norway and Iceland) simply by being supervised by one regulator existed already, except the vague definition of the division of competence between the 'home' regulator and the 'host' regulator allowed some countries to make life very difficult for EU based financial institutions that wanted to enter their market.
MiFID was meant to put a stop to that, clarifying the competences between the two regulators. So does it really matter if the gold plating of local bureaucrats (one of their favourite pastime) creates 27 different rule books ?
In principle, a single rule book is very important, but it is less important than a clarity in the division of competence. What stops the single market in financial services is not different rules for different jurisdictions, it is the invisible - and visible - barriers that a regulator can (until Nov. 1st, 2007) put up to make life difficult for a company that wants to open an office in the jurisdiction.
However the blame for this lack of clarity must be shared with all market partecipants, there are (21/02/2007) 8 months and five working days to full implementation and a lot of market participants have failed to wake up to the practical and operational aspects of MiFID. There are a lot of people out there who have not completely grasped the practical consequences of the possibility of using multiple venue to trade financial instruments and there is a generic lack of urgency amongst companies that were outside the rule book and now have to become MiFID compliant. (Astonishingly, 65% of compliance officer questioned in London a month ago still thought that MiFID only affected equity trading)
Level One and Level Two implementation of MiFID are still vague, those affected do not seem to have made enough noise about achieving clarity. Lack of clarity on one side and lack of leadership on the other side are far more dangerous (and therefore a far worse nightmare) than 27 different rule books.
No comments:
Post a Comment