Shakeup looks to avoid another crash

Published: Wilson Clark

On: Jan 2018

The great set of new rules ruling European Union financial markets has now come into existence. The markets in financial instruments directive II i.e Mifid II that means organizations dealing in commodities, bonds, shares and derivatives must have reported detailed information based on the trillions of euros in transactions.

The major aim is to raise transparency as well as bolster investor protection in order to avoid some of the problems of the financial crisis that arrived in the year 2007-2009 by exhibiting regulators to find bubbles earlier.

People who pay into it or draw a pension will be strongly affected by the changes, because traders will have to justify the complete investment decisions to investors, said by Rebecca Healey of Liquidnet.

She even added that, “It is allowing each and everyone in the chain of investment accountable for what they actually do.”

The new rules of Mifid II aimed at avoiding another crash

A partner at law firm Katten Muchin Rosenman said, the Financial Conduct authority has been planning to implement new rules. The government is possibly ditching Mifid II or even relax the rules after Brexit due to they offer increase reassurance to the international traders about the London city, he said further.

Rebecca Healey said that the American traders had been performing under pressure because of the clients to provide the same level of transparency needed by Mifid II. Using these new rules, the traders will have unbound the business practices.

She also said that there will have to be a clear audit trail for investment decisions, which will allow investors to see whether they are getting proper value for money.

However, their poor transparency can generate dark pools vulnerable to reflects of interest as well as predatory trading by a number of unscrupulous members of forum.