A New Report from Aite Group
While increased market regulation is necessary, too much regulation could adversely impact the retail investor, say asset managers.
A new report from Aite Group presents asset managers’ views on MiFID 2. Based on Aite Group interviews with heads of equity trading within global asset management firms active in the European markets, the report focuses on key areas relating to equity market structure–namely deferred publication, high frequency trading, consolidated tape, and broker crossing networks–and touches on clearing.
The Markets in Financial Instruments Directive review, dubbed “MiFID 2,” is set to further reform the European markets and correct the unintended consequences of the original regulation, primarily increased European market opacity. Asset managers recognize the importance of marketplace transparency in creating orderly and efficient markets that provide a clear picture of liquidity to traders and regulators. These asset managers also understand that too much regulation could ultimately hurt asset managers’ end clients and the party that MiFID 2 seeks to protect: the individual investor.
“While a noble endeavor, MiFID 2 regulation can damage the markets,” says Simmy Grewal, analyst with Aite Group and author of this report. “Introducing transparency that benefits retail investors who trade a few hundred shares on an ad-hoc basis but increases cost for institutional investors ultimately impacts the retail investor negatively. Regulators appear to be forgetting that asset managers represent this group.” This 13-page Impact Note can be downloaded by clients of Aite Group’s Institutional Securities & Investments service via the Aite Group website.
