Regulator backs exchanges over banks on trading rules
The European Union's markets watchdog has proposed a tightening in share trading rules within the bloc's MiFID II reform, marking a victory for exchanges at the expense of big banks only weeks before the new rules come into force.
The European Securities and Markets Authority (ESMA) has proposed that shares traded privately inside banks should be in the same price increments, or "tick size", as on public exchanges such as Deutsche Boerse, Euronext or Nasdaq.
"ESMA considers it important to ensure a level playing field between different means of trading as envisaged by MiFID II," the watchdog said on Thursday.
MiFID II is a revised version of rules designed to ensure harmonisation of financial services across the EU.
Exchanges have been lobbying to stop "systemic internalisers" inside banks from having an advantage.
"Such an outcome appears likely in today's technology driven environment, where the order flow is automatically redirected to the best-priced quote, even if the quote only offers a very marginal price improvement," ESMA said.
"It is doubtful, however, that such an outcome would provide end-clients with real benefits."
MiFID II comes into force on January 3, already a year behind schedule. ESMA has invited comments on the change by January 25. (Reuters)