outside any platform for Exchange regulated or not

European stock market industry is on the eve of a small revolution, because its constitution, the MIF (markets in financial instruments) directive, will change next year. And to read the first proposals early December by the Commission, the proposed revision is summarize not a modest polished but a transformation of the original text. At the turn away from liberalism to the first of its promoters, the ex-Commissioner for the internal market Charlie McCreevy. Nothing is still played, but the line drawn by senior officials in Brussels should not change orientation: the objective is to secure and increase transparency in the financial markets of the old Continent.

Today exploded in a multitude of electronic negotiation platforms, are characterized by a growing opacity, according to the European Executive. A significant proportion of the volume traded on the markets - the order of 40 based on historical scholarship lobby - would be off-market, i.e. outside any platform for Exchange, regulated or not.

Add the rise of the "dark pools", systems that allow stakeholders to negotiate blocks of securities in any discretion. To its promoters, this form of exchanges of securities is that reproduce an old practice of negotiating outside the order books and has the merit, once the orders executed, the identity of the buyers and sellers. For his critics, their success is mainly the excessive fragmentation of European markets, benefiting in the first place to specialists of market bargaining (banks, market makers), able to invest heavily in technological tools last cry and play at the speed of lightning in the intangible world kicked of mathematical formulae algorithms - via computers. Finally come the "crossing networks", these systems matching of titles developed within banks and beyond any oversight of regulators.

Exchange migration

In this dense stock market landscape, the Commission wants to give priority to the traceability of the titles. This will necessarily go through the migration of some of the "opaque" exchanges to transparent platforms. This will also be by redefining what the regulator means "place of execution of orders", not to mention the need to create a new status for the parallel electronic systems which thrived regulatory blurring the previous MIF. Finally, there are great novelty, the willingness of Brussels to launch the first milestones of a regulatory framework dedicated to the commodity markets. The only reference to date on these activities comes from the United States, where the Commodity Futures Trading Commission (CFTC) controls carefully trade futures contracts in Chicago - by far the world for agricultural products.

All these changes directly affect the large stakeholders in European markets. Let's start with the investment banks, very present in over-the-counter markets and favourable to the liberalization of the market sector. The obligation to spend more financial instruments by a regulated platform and a clearing house could reduce their margins, although the impact to this day does not appear also serious that they could have fear, given the substantial number of products that could always exchange off-market.

In any event, the future and the success of the next MIF, expected in mid-2011, will depend on the less than two factors: the capacity of the Esma, the future European financial markets authority, to impose himself in particular to the United Kingdom; and the ability of regulators to technically adapt to this stock landscape shifting, more and more dependent on computer engineers.