(Finance) – The Council of the European Union has reached a provisional agreement with Parliament European on changes to trading ruleswhich will increase the global competitiveness of EU capital markets and give investors access to the market data needed to more easily invest in financial instruments.
The revision of the regulation on markets in financial instruments (MiFIR) and the Second Markets in Financial Instruments Directive (MiFID II) aims to empower investors, in particular by making consolidated market data easily available at EU level, it said in a statement.
“I am delighted that we have reached a political agreement on this revision which will bring greater transparency and make market data more available more transparent and accessible financial market it will improve the level playing field among investors and enhance the EU’s competitiveness internationally, to the benefit of businesses and citizens”, he said Elisabeth SvantessonFinance Minister of Sweden, which holds the rotating presidency of the EU.
Market data and consolidated tapes
Currently, trading data is scattered across multiple platforms, such as stock exchanges and investment banks, making it difficult for investors to access accurate and up-to-date information. The revision agreed today will set up “consolidated tapes” or centralized data feeds at EU level for different types of assets, bringing together market data provided by platforms where financial instruments are traded in the EU.
“This – according to the Council – will make easier for both professional and retail investors to access key information such as the price of instruments and the volume and time of transactions”. Market data from all trading platforms will be included in consolidated tapes, which will aim to publish information as close to real time as possible. As a result, investors will have access to up-to-date transaction information for the entire EU.
Payment for order flow
The agreement reached today imposes a general prohibition of “payment for order flow” (PFOF), a practice through which brokers receive payments for placing client orders on certain trading platforms. Today’s compromise also introduces the possibility for Member States where the practice of PFOF already existed to allow investment firms under its jurisdiction to be exempted from the ban, provided that PFOF is only provided to clients in that Member State. However, this practice must be phased out by June 30, 2026.
Commodity derivatives
The co-legislators also reached agreement on the amendments proposed by the European Parliament on commodity derivatives.
The next steps
Once consolidated, the text of the interim political agreement will have to be formally adopted by both the Council and the Parliament, before it can be published in the Official Journal of the EU and enter into force.
(Photo: Joshua Mayo on Unsplash)