EU financial associations call for evidence-based approach to MiFIR review
European financial associations, including the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), and the German Investment Funds Association (BVI), are urging EU policy makers not to give in to pressure in the review of the Markets in Financial Instruments Directive (MiFID/R). They are calling for an evidence-based, ambitious approach, despite the fact that it might take longer to complete the negotiations. This is because the MiFID/R review is vital for the completion of a Capital Markets Union (CMU) that is beneficial for investors and issuers, and ensures that EU capital markets across asset classes are more integrated and competitive globally. If policy makers cannot pass legislation that builds the necessary market infrastructure, it could put the EU at a disadvantage compared to other global markets.
Strengthening EU Capital Markets: An Evidence-Based MiFID/R Review
European financial associations, including the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), and the German Investment Funds Association (BVI), are urging EU policy makers not to give in to pressure in the review of the Markets in Financial Instruments Directive (MiFID/R). Their call for an evidence-based approach in the MiFID/R review highlights the importance of a comprehensive and effective assessment of the regulatory framework. By advocating for a thorough review process, these financial associations aim to address industry concerns and ensure that the resulting regulations promote a Capital Markets Union (CMU) that benefits investors and issuers, while enhancing the integration and competitiveness of EU capital markets on a global scale.
The potential implications resulting from an evidence-based approach to the MiFID/R review are significant. Firstly, it would enable policymakers to identify and address key issues within the existing framework, leading to more robust investor protection measures and enhanced transparency requirements. By disallowing value-based pricing for market data, investors and the general public would be better protected, ensuring fair treatment and a level playing field in financial markets.
Secondly, an evidence-based approach could positively impact market liquidity, which plays a vital role in supporting the growth and development of companies. By improving market liquidity, companies would have access to better valuations, enabling them to secure the necessary financing for their investments. This, in turn, would prevent EU companies from seeking IPOs outside the EU or moving their listings to other jurisdictions in search of more favorable valuations.
Furthermore, the completion of a comprehensive MiFID/R review aligned with the CMU objectives would strengthen the position of the EU in global markets. By creating a more integrated and competitive capital market landscape, the EU would become an attractive destination for investment, attracting capital inflows and driving economic growth.
To stay compliant with potential regulatory changes resulting from the MiFID/R review, financial institutions should proactively engage in the review process and collaborate with industry associations like AFME, EFAMA, and BVI. This involvement will allow them to shape regulations that align with their business models and operational strategies. Conducting thorough impact assessments will help financial institutions evaluate the implications of regulatory changes, enabling them to adjust their internal compliance and risk management frameworks accordingly. Investing in technology and infrastructure will also be crucial to adapt to new reporting, transparency, and operational requirements.
In summary, an evidence-based approach to the MiFID/R review, advocated by prominent financial associations, holds the potential to strengthen investor protection, improve market liquidity, and enhance the position of the EU in global markets. Financial institutions should actively participate in the review process, conduct impact assessments, and invest in technological solutions to ensure compliance with forthcoming regulatory changes and seize the opportunities that a more integrated and competitive capital market can offer.
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