Earlier this year, on 24 July, the European Commission presented a Capital Markets recovery package which included a MiFID quick fix proposal.
Already in spring, the lengthy behind the scenes discussions between the Commission and Member States as to the scope of this quick fix revealed the upcoming challenges the actual MiFID review would face once the Commission proposes it. The debates in the European Parliament leading to the adoption of the European Parliament mandate and report proved to be as intense.
Issues brought up in the European Parliament
Indeed, in the parliament once again questions on the scope and the legitimacy of a quick fix arose, and some of the issues such as commodities, investment research or investor protection, to be discussed in the upcoming MiFID review were highlighted.
On 29 October, the ECON committee adopted the report presented by MEP Ferber (well known to MiFID specialists as he was already rapporteur as MiFID 2 went through Parliament). However, the committee did not grant the negotiating team the mandate to enter into negotiations with the co-legislators in the so-called trilogues as it is usually done. This meant the report would have to be discussed and voted in plenary.
As a result, on 23 November, Mairead McGuinness, the new Commissioner for Financial Services, Financial Stability and Capital Markets Union came the European Parliament, to discuss and support the proposal and urge for a swift adoption.
In her opening remarks, McGuinness stressed that the recovery from the crisis will have to be green. To do that, green energy transition needs to be accompanied with liquidity and transparency in the market for energy derivatives. Moreover, producers of green energy need to negotiate forward contracts in order to secure minimum prices for energy produced from renewable sources. The aim of forward contracts is to provide certainties to investors and to be effective. In addition, they need to be liquid and available on a new generation of energy exchanges.
During the debate, voices were raised to ask the Commission for a full MiFID review with impact assessment in order to address the structural problems which cannot be solved in a quick fix. Other voices stressed that they saw this proposal as de-regulation and not a quick fix to solve the recovery needed following the Covid crisis.
The vote was finally adopted after this debate. Trilogue negotiations are ongoing, the current presidency of the Council (Germany) is hoping to reach an agreement by the end of the year. It is a tight deadline and a lot of efforts are placed in that direction.
The European Commission is preparing a MiFID/MiFIR review proposal for the end of 2021 and given the discussions held on the “quick fix” version, one can imagine the discussions to come will be interesting.
By Aurélie Cassou and Sofia Badari