The European Parliament has already earmarked parts of MiFID II’s technical standards which will need tweaking before it approves them, according to one of its members.
Kay Swinburne, Member of the European Parliament, believes that ‘five or six’ of the rules are likely to get passed back the European Securities and Markets Authority (ESMA), which will need to amend them or face those parts being rejected.
ESMA submitted the regulatory technical standards in early October, which are now being scrutinised by the European Council and Parliament.
“Within the ones we have had – we’ve had 2000 pages – when we have gone through them, there are areas where we don’t feel they have taken into account what the political incentive and motivation was in the first place”, said Swinburne.
“One of them is within the non-equity markets, so particularly in the bond markets, where we feel the move towards increased transparency…we’ve always felt the US model using TRACE was a very good model.”
“So we’ve been disappointed that they’ve gone for a big bang approach with a large number of names that we wouldn’t consider to be liquid.
Speaking at the Futures Industry Association Expo in Chicago Swinburne added that the Parliament was heavily scrutinising the rules, which will affect a range of markets and asset classes across Europe. She added that if ESMA does not meet their requirements, the Parliament does possess the power to reject certain rules, however she hoped it wouldn’t come to that.
“At the moment, on a large number of topics, about five or six of them, we have unity among the negotiating team, which means that we are very likely to have the majority we would need to reject one of more of those standards.
“If they don’t take notice and decide to ignore them…then a rejection could slow things up by 3-6 months, but all-in-all we think it is important to get the rules right.”
Swinburne also said that MiFID II is unlikely to be delayed just because there are some contention points, and that while certain parts may be held up, the overall regulation will come into force in January 2017.