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MiFID: S&Ds reject conservatives’ deregulation push masquerading as Covid-19 crisis measure

Date

10 Feb 2021

Sections

Euro & Finance

The Socialists and Democrats are leading the drive to reject the Markets in Financial Instruments Directive (MiFID) Quick Fix in tomorrow’s vote in the European Parliament’s full plenary.

Eero Heinäluoma MEP, S&D negotiator on the MiFID Quick Fix, said:

“Instead of supporting SMEs thirsting for liquidity, this MiFID Quick Fix uses the Covid-19 crisis as a cover to deregulate financial markets. The fingerprints of the EPP are all over this proposal to relax stricter rules put in place as lessons learnt after the last financial crisis. Even a number of transparency requirements and position limits in the derivatives market would be removed under this proposal. No investor association, no NGO, no think tank has spoken out in support of these counter-productive measures.

“The S&D Group will vote against this MiFID Quick Fix, because this proposal would make it even harder for SMEs to raise capital by obstructing the flow of private money into the real economy. Clarity on product governance rules and the real costs linked to investment products are crucial to attract investments. This MiFID Quick Fix undermines these goals in a number of ways. Firstly, by granting substantial exemptions it would undermine the very rules protecting investors against all sorts of mis-selling. Such a step is never justified, and even less so in times of crisis. Secondly, the re-bundling of investment research for SMEs would lead to lower clarity and reduce investor understanding of research costs, thereby rolling back the achievements of MiFID 2, which contributed to lowering the costs for retail investors by allowing for a more transparent report of costs and tackling conflicts of interests. Thirdly, lifting provisions around position limits in derivative contracts is not backed by any impact assessment.

“We call on the Commission to put forward an ambitious and balanced reform of the MiFID rules by mid-2021 after full consultation of all stakeholders and based on a serious impact assessment that will protect investors and help SMEs.”

Jonás Fernández MEP, S&D spokesperson for economic and monetary affairs, said:

“Since the Covid-19 crisis hit households and companies hard, we the Socialists and Democrats have acted decisively to support workers and SMEs, who are struggling to raise capital. We have led the drive for the EU Recovery Fund, and welcome the EIB’s €25 billion Pan-European Guarantee Fund to support SMEs.

“To speed up the recovery, we must put measures in place that improve access to investments for SMEs, protect investors and guarantee full price transparency. This MiFID proposal fails on all three fronts.

“Throughout the negotiation process on the Quick Fix, we have expressed strong reservations. First, the Commission put their proposal on the table without a proper consultation and impact assessment. They even went so far as to specifically remove some transparency requirements and position limits in the derivatives market. The EPP negotiator even tried to include further deregulation serving the interests of the financial services lobby, but the economic affairs committee blocked his attempts. The agreement reached by the EPP negotiator and the German presidency in December 2020 failed to improve the Commission’s proposal in points deemed crucial by the S&D Group to achieve the goal of actually supporting SMEs instead of deregulating for the sake of the special interests of the financial services industry. The S&D Group rejects the MiFID Quick Fix as we will not support deregulation of financial markets masquerading as Covid-19 crisis measures.”

 

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