Officials from Lithuania, which takes over the presidency of the Council of Ministers on 1 July, will have the tough task of brokering an agreement between the Council and the European Parliament on proposals to regulate securities trading. Member states this week backed a deal to improve transparency and reduce the volatility of financial markets. But much remains to be done to put the proposals into effect.

After 30 months of talks, ambassadors from member states on Tuesday (17 June) agreed a common position on the Markets In Financial Instruments Directive (Mifid) and accompanying regulation, which is expected to be rubber-stamped when finance ministers meet in Luxembourg tomorrow (21 June). The UK, which is home to most of Europe’s financial trading, won a last-minute concession that could limit the scope of the pan-EU regulator, the Paris-based European Securities and Markets Authority, to over-rule decisions taken at a national level.

Changes to Mifid are vital to prevent some of the riskier behaviour of financial markets since the start of the economic crisis in 2008, according to Michel Barnier, the European commissioner for the internal market.

Tough talks lie ahead, however, between member states and the Parliament. EU officials are already predicting that the talks will be fierce to bridge the gulf between the two sides. Member states support the European Commission’s plans for a new type of trading venue, organised trading facilities (OTF), to deal with equities and non-equities. The Parliament wants only non-equities to be traded on OTFs.

Member states and MEPs are also at odds over how best to subject securities trading to greater transparency, restricting the use of ‘dark pools’ – off-exchange trading venues that are lightly regulated – and introducing a trade transparency regime for non-equities such as bonds, derivatives and structured finance products.

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