The European Parliament is expressed today on the proposed reform of the Investment Services Directive (ISD), presented last November by the Commission. At stake are the future rules of organized execution of investor transactions by exchanges, other trading systems and investment firms. The new directive, passing the system of concentration of trade on regulated markets in other countries (in Italy, for example), aims to stimulate competition between traditional exchanges and other trading systems. In particular, the concentration exceeded the scheme would open the way for trading of securities carried out by the banks through the internalization of trade (internal matching of orders).
this perspective that, from the stage of gestation of the proposal, alarmed European stock markets: "We are not worried so much by competition and the effects that a widespread internalisation of trade could have on market liquidity and transparency and efficiency in price formation, "said a representative of the Federation of European stock exchanges. The Commission, to respond to these concerns, has included in its proposal, Article 25 of stringent pre-trade transparency obligations that would require the person making systematic internalisation of trade in shares admitted to trading on a regulated market, the public firm buying and selling. "They are obligations which may stifle competition that alternative trading channels can make the exchanges and as they would introduce a requirement for the concentration of trade even if does not exist today, to the detriment of competition and investors," said the rapporteur Theresa Villiers (British Conservative), by incorporating the demands of the City and investment banks.
Which
on 2 September, despite a strong mobilization of European stock exchanges, have obtained the first victory of the text adopted in committee economy the controversial article 25 was sweetened with the introduction of the CD or the price improvement opportunities for those who internalize trade, to apply a price equal to or better than (they, ed) listed. "It 's a mechanism to render meaningless the requirements of transparency, everyone knows that the City, which is also a bridgehead of U.S. investment banks, has a strong advantage in terms of internalization, other companies such as Deutsche Bank or ABN Amro have ambitious plans in that area, "said a French MEP (Just France and Italy have more expenses in defense of pre-trade transparency).
today an amendment to Article 25 will attempt to remove the possibility of price improvement. The outcome of the vote is very uncertain (in the economy committee majority in favor of price improvement has been only one vote) and the groups are breaking up borders. A parallel battle then cover the scope of the constraints on both the pre-trade transparency and best execution, investment banks that want to limit itself to non-business customers.
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