MiFID II critics are not seeing the big picture

The Mifid II rules are leading to broader participation in capital markets by Europe’s savers. This will far outweigh the costs, such as the more reduced investment research on small stocks. Recent criticism appears to overlook the broader picture, where the advantages of this revision are starting to become visible.

Earlier versions were fundamental in opening up EU securities markets, and have seen the City of London become the centre of securities trading, with the provisions allowing remote access for traders all over the EU. But some elements had to be further strengthened, above all the rules dealing with the protection of investors.

Early data on the effects of Mifid II indicate that market opening and integration is continuing apace, with further electronification or platform trading in products that had not been within the scope, such as government and corporate bonds, derivatives and exchange traded funds. Banks are also confronted with many more requests for information from clients, as a result of the demand for more transparency on fees and charges, which is where Mifid matters for individuals.

Karel Lannoo is General Manager of ECMI. Originally published in the Financial Times, 17 May 2019.