European Union lawmakers and national officials will make a renewed attempt this week to clinch a deal to overhaul the bloc’s financial-market rulebook.
Unresolved issues include to what extent the revamped law should cover trading in derivatives linked to energy markets and what investor protection rules should be included, said Sven Giegold, a German lawmaker representing the European Parliament’s Green group in the talks.
“It’s totally unclear whether there will be a deal” at a meeting on Jan. 14 in Strasbourg, France, Giegold said in a phone interview. While legislators are seeking for the law to cover energy contracts that are traded for speculative rather than hedging purposes, governments are split over whether the measure goes too far, he said.
Nations are also resisting a push by lawmakers to include rules aimed at protecting investors who buy insurance products, he said.
The EU’s bid to update its market legislation, known as Mifid, is a key piece of the bloc’s efforts to implement agreements reached by the Group of 20 nations in the wake of the financial crisis after the collapse of Lehman Brothers Holdings Inc.
Michel Barnier, the EU’s financial services chief, has said the updated rules are needed to rein in “speculative trading activities” and to “improve the structure of the market.”
Barnier’s proposals, published in 2011, include the creation of a new type of trading venue, a push for derivatives contracts to be traded on regulated platforms, as well as curbs on high-frequency and commodity-derivatives trading.
Hammered Out
The updated rules must be negotiated and approved by national governments and by the EU Parliament before they can take effect. In practice, this means that a deal must be hammered out between members of the assembly and Greece, which took over the EU’s rotating presidency at the start of this year.
Legislators and officials failed to broker a deal on the law at their last negotiation meeting, which took place in Brussels on Dec. 18, at a time when Lithuania held the EU presidency.
Negotiators were “some millimeters” away from a deal at that meeting, Markus Ferber, a German legislator leading the assembly’s work on the draft law, said in a phone interview.
“I think there will be some progress” at next week’s session, he said. “I don’t know if we will finalize everything.”
Rival Providers
Other open issues in the talks include the setting of rules on how clearinghouses can access trade-feed data from rival services providers as well as conditions for how non-EU-based companies can offer services in the bloc, he said.
“Energy firms are lobbying very hard for exemptions, creating the risk that the Mifid legislation has a massive loophole in it,” Arlene McCarthy, a U.K. lawmaker in the parliament’s Socialist group, said by phone Thursday.
“If you don’t have a strong definition of financial instruments, then you end up exempting lots of instruments” from the rules, she said.
A spokeswoman for the European Commission, the 28-nation EU’s executive arm, declined to comment on the state of play of the Mifid talks. A spokesman for Greece’s EU presidency couldn’t be immediately reached for comment.
A deal would update existing Mifid legislation from 2004. The earlier version focuses mainly on the equities markets and measures to break down monopolies enjoyed by national exchanges.