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Pierre Darier |
The Financial Services Authority (FSA) has warned that the increase in trading platforms expected as a result of MiFID could make it harder to monitor market abuse. However a Swiss statement is concerned that MiFID will increase costs for investors and that a blanket criminalisation of all perceived market abuse is an excessive reaction.
A major component of MiFID is the "level playing field" and increased competition, no more so than in the area of alternative trading platforms. The FSA has issued a statement expressing concern that a fragmented market will make it more difficult to collect comparative data on trading behaviour and that this could lead to a weakening of regulators' ability to combat market abuse. The FSA is developing new monitoring systems, expected to be in place at the end of this year, to identify illegal and suspicious trading activities but these will face the task of collecting data from new multilateral trading facilities, increased exchange services plus systematic internalising activities within firms when MiFID goes live this November.
On the other hand, Swiss bankers feel that the European Union's determination to make all market abuse - insider dealing or price manipulation - a crime rather than just an offence is going too far. Pierre Darier, Chairman of the Swiss Private Bankers Association, said that not everything that went wrong in markets was because of criminal intentions. "I think we all see that some forms of misbehaviour in financial markets are criminal. But some others are not ... and if you treat everything the same as major crimes ... you don't know how to differentiate," he said. He added that Swiss regulators should not follow blindly the new international minimum standards and adopt over-strict regulations to fight the problem.
The Swiss were also critical of the benefits of MiFID. Konrad Hummler, vice-president of the association, said that MiFID would increase costs for investors and make life harder for smaller banks. "It is a guarantee for clients, and nothing comes without a price. My forecast is that it will put a premium on markets." Although there are no plans that non-EU member Switzerland – the world's largest haven for offshore money – will comply with MiFID, all Swiss banks will have to comply in their offices within the EU.
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