The European Parliament is seeking to fast track the implementation of the third Markets in Financial Instruments Directive (Mifid III) as it seeks to remedy potential market disruption from the introduction of Mifid II.
Mifid II is expected to be introduced in January 2018 following a year’s delay from its original implementation date.
However, sources close to European policy makers said that there were so many outstanding problems with the legislation that another update was essential and a target date of December 2017 has been set for the introduction of Mifid III.
Totali Buffooni, a spokesperson for the European Parliament, said: “It’s fairly obvious that we got most parts of Mifid II wrong so we are seeking to rectify that with Mifid III, ideally coming into force before the implementation of Mifid II.”
Proposals for Mifid III include the creation of new, phone based, bilateral trading methods, which have provisionally been termed “OTC” trades and the reforms overall will seek to “encourage rather than eviscerate liquidity” in derivatives markets.
“Many people here have realised since the discussions over Mifid II that there is actually some benefit in having capital markets in Europe and that the original proposals to completely eradicate trading might have over-stepped the mark,” said Buffooni.
“It is also apparent that imposing capital charges of hundreds of millions of euros on individual proprietary traders might be erring too much on the side of caution.”
Buffooni allayed fears that the market would not be ready for Mifid III. “We are looking at a couple of sides of A4 for this rather than the thousands of pages in Mifid II. It’s very much an ‘as you were’ kind of thing rather than a radical reform.”