Markets in Financial Instruments Directive - The Way Forward in European Securities Market Integration?
25 Pages Posted: 22 Feb 2007
Date Written: December 31, 2006
Abstract
European financial market integration and investor protection are the main objectives of the Markets in Financial Instruments Directive. The public discussion on the effectiveness of MiFID is still controversial before its entry into force in November 2007.
We contribute to this discussion by comparing MiFID against selected aspects of regulatory and financial market integration theory and provide empirical evidence on MiFID driving changes in securities market structure. Four new initiatives in trade reporting and transaction business are discussed with their likely impacts.
We conclude that MiFID is generally in line with theoretical requirements and therefore suitable to achieve its objectives. On the empirical side, new initiatives will increase competition. The market for trade reporting services will change significantly whereas new initiatives in transaction services are not able to differentiate themselves successfully in existent competition.
Keywords: MiFID, financial market integration, financial market regulation
JEL Classification: G18, G28, K22
Suggested Citation: Suggested Citation
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