LONDON, April 17 (Reuters) – Stock exchanges and asset managers agreed this week ahead of European Union negotiations on how much information investors should be given to find the best deals in Europe’s fragmented stock markets.
The European Parliament and EU nations begin negotiations on Tuesday to complete the reform of the bloc’s securities rules, known as MiFID, which aim to make the capital market more efficient now that it faces competition from a post-Brexit London is.
It includes mandatory contributions from trading platforms to a “consolidated tape” or record of share prices, a long-standing feature of US markets. Proceeds from sales of the tape would be shared among the contributors.
In first positions, Parliament has backed a tape providing real-time prices of completed stock deals – currently many investors only receive delayed prices – and a detailed look at the pre-trade prices on offer.
EU countries have also supported a band of real-time stock deals completed, but with less comprehensive pre-trade data.
Exchanges that make money off market data say Parliament is going beyond transparency to give investors a trading tool.
“The inclusion of real-time data ahead of trading, as proposed by the European Parliament… would only further distort the EU’s market structure,” the Federation of European Securities Exchanges (FESE) said in a statement last week.
But the Association of Financial Markets in Europe (AFME), whose membership includes global banks and wealth managers, said on Monday that an “ambitious real-time pre-trade range” would help reverse the worrying trend that European stock markets were “significantly less” are more dynamic” than their US colleagues.
The European Fund and Asset Management Association (EFAMA) also supports Parliament’s position, saying liquidity in European stock markets has contracted by 25% since 2013, compared with a 23% rise in US markets, with a number of of factors have contributed.
“One of these is undoubtedly the lack of a consolidated equity band, without which a complex and fragmented EU27 market suffers a competitive disadvantage when it comes to distribution to international investors worldwide,” said EFAMA.
The negotiations will also seek to iron out disagreements over whether brokers should be banned from receiving commissions for sending stock orders to a particular platform.
Reporting by Huw Jones Editor of Mark Potter
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