With a number of EU countries running late on implementing new rules on the integration of financial markets (MiFID), experts say those who fail to comply will suffer major competitive disadvantages.
The MiFID Directive, agreed by EU members in 2004, is set to overhaul European securities markets by fostering competition, increasing market efficiency and improving investor protection. Member states were asked to transpose the directive into national law by January 2007, but the deadline was postponed until November the same year.
Internal Market Commissioner Charlie McCreevy said: “MiFID is a ground-breaking piece of legislation. It will transform the landscape for the trading of securities and introduce much-needed competition and efficiency.” He added: “I urge those member states that have not transposed to hurry up – such lack of action will damage their own firms.”
However, to date not all member states have introduced the new legislation, which should come into force on 1 November 2007. Namely, Spain, Hungary, the Czech Republic and Poland are running late and are expected to miss the deadline, according to the Commission.
Karel Lannoo, Chief Executive Officer and expert on financial market regulation at the Centre for European Policy Studies (CEPS), said: “Member states are short-sighted not to transpose”. He argues that banks and brokers in those member states where implementation is lagging behind will suffer a “huge delay” and be at a “competitive disadvantage” compared to those that have already put the new rules in place.
Moreover, there are major court cases looming for those member states that do not meet the deadline. The Commission said it would “rigorously pursue those who are late”, and indeed it has already begun infringement proceedings, though, according to officials, it hopes that the issue will not end up before the European Court of Justice (ECJ).