On July 10, a sub-committee of the House of Lords EU Select Committee published a report on the European Commission’s legislative proposals to amend the Markets in Financial Instruments Directive (2004/39/EC) (MiFID II). Report.

The sub-committee concludes that:

• There is a risk that, if introduced, the provisions relating to third country access could lock third country firms out of the EU markets, which would have an extremely damaging effect on European financial markets.
• While the committee understands the need for greater transparency, a “one-size-fits-all” approach to pre-trade transparency must be avoided.
• There is considerable uncertainty about the implications of the proposals for a new category of organised trading facility (OTF), and the proposal to increase regulation of algorithmic and high-frequency trading (HFT).
• The MiFID II proposals have been rushed, and risk creating confusion rather than providing clarity on the regulatory framework for investment.