Daily Management Review

The Global Financial World To Be Impacted By New Regulations Of EU Implementable From January


12/17/2017




The Global Financial World To Be Impacted By New Regulations Of EU Implementable From January
There would be far reaching consequences for the entire industry from a set of new rules for the financial sector that are to be imposed by the EU in in January.
 
The time and manner of asset trading is being attempted to be more transparent by the reforms. The new standards would impact anyone who would be trading in stocks, bonds, foreign exchange, commodities or exchange-traded funds (ETFs).
 
The lacunae identified in the analysis of the 2008 financial crisis forms the basis of the new legislation known as Mifid II, which is being launched by the European Commission, the executive arm of the EU.
 
"Markets in Financial Instruments Directive" is the full form of Mifid.
 
It was in November 2007 that the first set of Mifid was issued, just ahead of the financial crisis. Bringing down trading costs and integration of the dissimilar financial markets was the aim of the earlier version.
 
The new version – Mifod II seeks to broaden the earlier rules to include some other asset classes.it is also designed to create a better regulatory framework for over-the-counter (OTC) contracts that brings the buyer and seller into direct contact and contracts. The authorities claim that the financial sector would be strengthened and investor confidence would be enhanced by the new regulations. 
 
A section of traders operating or based in jurisdictions other than the EU would be impacted even as the new regulations would only be applicable for the member states within the bloc.
 
For companies whose stocks are separately listed in Europe would come under the new regulations because it includes options — a form of financial derivative that traders used and one that makes use of an underlying Europe listed asset. An Asian bank, for example, offering a financial product to an EU client would also fall under the new rules. Pressure to shift from phone trading into the digital system is also being put on global institutions which engage in such trading. 
 
Privacy rule that are applicable in other jurisdictions would essentially clash with the new regulations because some of the 50 new data fields that traders would have to fill clash with some privacy norms.
 
Fund managers would have to make separate payments to brokers and banks for research and trading services due to the new regulations. At present only one payment is enough for both the services.
 
But the authorities claim this new practice would enable clients to easily identify the usage of their money which would enhance the transparency in fund management.
 
After the new regulations gets implemented in January, there could be a fall of as much as $1.5 billion annually in the global investment research costs, estimates management consultancy Oliver Wyman. At present about $5 billion is spent globally, according to the consultancy firm.
 
(Source:www.cnbc.com)






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