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On Tuesday, 8 November 2011, Boerse Stuttgart hosted a conference on the EU Markets in Financial Instruments Directive (MiFID). This was the fifth such meeting in Stuttgart of representatives from supervisory authorities and banks as well as financial advisers and academics. More than 100 experts discussed the current state of affairs and the implementation of the Directive in banks, stock exchanges and authorities, focusing on a number of topics, including the European Commission’s proposals for revision of the Directive.
It has become necessary to amend the Directive because areas such as high-frequency trading were not covered by the original 2007 Directive. The liquidity provision of such trading models was a particularly controversial topic of discussion during the amendment process, explained Carsten Ostermann, of the European Commission’s Securities Markets Unit, in his talk. However, as he pointed out, this liquidity is also of benefit to investors and the revision was a necessary step for the protection of investors. “No area should remain unregulated,“ added Carsten Ostermann. Central to this, among other things, was the extension of the transparency regulations beyond their application to equities. However, Carsten Ostermann emphasised that a sense of proportion was maintained in the amendment process. “An additional tightening of liquidity would obviously not be helpful for less liquid securities," he commented.
In his talk, Georg Baur, Director of the Association of German Banks in Berlin, revealed the impact of the Directive on the banking sector. He pointed out that the amendment will result in market maker obligations for high-frequency trading. Georg Baur is also critical of the proposal to give the European Securities and Markets Authority (ESMA) the authority to impose restrictions on the distribution of certain products. As he pointed out: “This part of the amendment will not only result in narrowing the range of products, since competition could also suffer."
Professor Dr Jörg Franke, CEO of the Federal Association of Securities Trading Firms at the German Stock Markets (Bundesverband der Wertpapierfirmen an den deutschen Börsen e.V) gave a talk on the impact of the MiFID on the competitive situation in European securities trading from the point of view of stock exchanges and securities firms. He feels the current competitive situation is characterised by overcapacities in the high-volume trading of large public limited companies and too-low capacities in the area of small public limited companies.
In the concluding round of discussions, Dr Günter Birnbaum, Head of Securities Supervision at the German Federal Financial Supervisory Authority (BaFin -Bundesanstalt für Finanzdienstleistungsaufsicht) stressed that the German legislator also has a role to play. As Dr Birnbaum emphasised: "For the transposition of the Directive into national law, the peculiarities of the individual markets must be taken into account.”
In his summary, Dr Christoph Boschan, Managing Director at Baden-Wuerttembergische Wertpapierboerse GmbH, said that by hosting the MiFID Conference, Boerse Stuttgart had created a joint platform for important dialogue to support the legislative process. The high level of interest in the event underlined not only the need for information on this current and controversially discussed subject, but also demonstrated the strong desire for an informed discussion with experts. “Consequently Boerse Stuttgart will certainly host another MiFID Conference next year,” commented Dr Boschan.
