'Crunch time' for EU financial services 

The author lays out the main problems that the Commission intends to tackle, such as the monopoly whereby securities transactions must pass through domestic exchanges, which would enable freer trade in such shares and give "greater choice and lower fees to consumers". Moreover, the Market in Financial Instruments Directive (MiFID) is intended to provide greater transparency and consumer-protection standards.

Boyfield argues that MiFID will not be rigorously implemented, due to a number of built-in political compromises, in the form of 71 optional amendments that member states can choose to apply. This political compromise, he further explains, is the result of a rift between member states which favour free markets, such as Ireland, UK, the Netherlands and Sweden and those who oppose it, such as France, Spain and Italy.

Further signs that MiFID will suffer from weak implementation, according to the author, are the "staggered adoption across the EU" and a number of countries falling short of implementation targets, as underpinned by a recent survey by the Committee of European Securities Regulators (CESR).

Boyfield predicts that due to this failure to implement the rules, "there will be mounting calls from Brussels for a single financial services regulator for the EU". Furthermore, he fears that compliance costs are "likely to be substantial".

With such a grim outlook for the directive, the author concludes by questioning the adoption of MiFID in the first place. According to Boyfield, it "fails to establish a single EU market in financial services".

• Wall Street Journal: 'Deeply Unsatisfactory' (by Keith Boyfield, 19 February 2007)
• Keith Boyfield Associates