On 07 April, the Banking and Payments Federation Ireland (BPFI) published its position paper on the European Commission (EC) proposal amending the Markets in Financial Instruments Regulation (MiFIR).
As the EU looks to develop a robust and well-integrated capital markets, we believe the proposed changes to MiFIR can support this political priority, while helping to deliver on the EU’s other key objectives, such as the transition to a digital and sustainable economy where financial markets have a major role to play through the diversification of funding sources.
Against this backdrop, we believe the overarching objectives of the review should be to enable EU markets to further contribute to the economic recovery by allowing them to support the financing needs for EU companies. In our opinion, the proposal goes some way to ensuring that these objectives are delivered upon, particularly with the introduction of a real-time comprehensive consolidated tape, which can bring significant added value to the development of EU markets.
We also support certain targeted changes that seek to make the existing regime more effective and proportionate, like the adjustments to the EU STO and DTO. In our view, ensuring the regulatory framework remains flexible is critical to the overall attractiveness of EU markets considering the changes being introduced by the UK through its Wholesale Markets Review.
At the same time, we also think certain aspects of the proposal could be improved through targeted changes to ensure that the framework is appropriately calibrated. As outlined in the position paper, we have put forward a number of recommendations which we would encourage EU policymakers to consider during the legislative process. These focus, in particular, on 1) the make-up of the consolidate tape 2) data quality challenges 3) the transparency regime for the various asset classes, and 4) the ban on payment for order flow, among others.