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IEA Financial Services unit releases report outlining the unintended consequences of MifID II regulations

https://iea.org.uk/wp-content/uploads/2019/05/FSU_Not-everyones-cup-of-tea_web.pdf
MiFID II, together with MiFIR (Regulation (EU) No 600/2014), was intended to create a more transparent, competitive and integrated financial market in the EU by reducing trading outside regulated markets, increasing protection for investors and consumers, and improving financial stability. The Directive harmonises the EU regulatory regime with respect to organisational requirements for investment firms, regulated markets, data reporting services and conduct of business rules for investment services, including inducements, disclosure requirements and product governance rules.

However, one year on, many practitioners’ initial fears about MiFID II appear to have been realised, especially with regard to unbundled research causing a reduction in the amount of research available on smaller companies. Fears that new firms would be discouraged from starting in the UK due to excessive EU regulation and their ‘gold plating’ by the UK government have also proved to be well founded. Gold plating was cited as a particular problem for new market entrants in the insurance industry.

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Former Senior Economist

Catherine McBride is an economist with 19 years’ experience working in financial services, primarily trading financial, equity and commodity derivatives. She previously worked as an economist for the IEA and for the Special Trade Commission at the Legatum Institute and ran Financial Research for the Financial Services Negotiation Forum (FSNForum), developing ideas about financial service governance and policy to support growth and prosperity after the UK leaves the EU. Catherine has previously worked in derivatives with ADM Investor Services International, Chase Manhattan, Baring Securities, Bain & Co Securities part of Deutsche Bank Australia and as a financial analyst for IBM.



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