‘Watershed moment’ as new financial rules kick in
ONE of the final packages of reforms following the banking crisis comes into force today, putting investors and financial firms in line for a major regulatory shake-up.
Europe’s Markets in Financial Instruments Directive — Mifid II — is an attempt to provide greater protection to investors and shore up transparency throughout the financial system.
The body of measures includes around 1.7 million paragraphs of rules covering the EU’s entire trading system, from brokers, hedge funds and institutional investors, to banks, exchanges and traders.
Catherine McGuinness, the City of London Corporation’s policy chairman, said the implementation will be a “real watershed moment” for financial regulation.
She added: “It will be the last major piece of regulatory reform following the financial crash of 2008.
“Financial and professional services firms have worked hard in recent times to implement these onerous and complex changes.
“While they have been a big distraction for firms, I am certain they are well-placed to strengthen their position in the global marketplace.”
Among the changes, asset managers will now have to pay for the research that prompts their investment decisions, as regulators clamp down on potential conflicts of interest which could harm investors.
It will also attempt to help regulators pinpoint risks by making institutions report information about trades instantly, with bond traders having to tell the market about their deals within 15 minutes of them being secured.
Giles Edwards, S&P global ratings analyst, struck a downbeat tone, saying the change would bring “more losers than winners”.