Markets in financial instruments: - extracts from the Joint debate

Type: News   Reference: 87507   Duration: 00:04:58  Lieu: Strasbourg, France - European Parliament
End production: 25/10/2012   First transmission: 25/10/2012
Markets in financial instruments: - extracts from the Joint debate MiFID was imposed by the European Union in 2007 with the goal of reinforcing the European financial market abd harmonizing regulations primarely by enhancing market transparency and significantly improving investor protection. Revising MiFID is intended to extend the reach of the regulations and to take into account new participants and providers in the financial market. The new rules shall apply from 2015. The Commission recast proposals on the Markets in Financial Instruments Directive and Regulation (MIFID and MIFIR) include provisions with the explicit purpose of addressing the need to reinforce supervision and regulation in commodity related financial markets. These proposals foresee in particular position limits or alternative arrangements (Article 59) on commodity related derivative financial instruments. Objective should be to facilitate price discovery and efficient hedging of the price risks to which producers and consumers are exposed, and therefore, to prevent and correct asset bubbles and other distorsions. Commodity markets are fundamentally different from pure financial markets. While one can live a life without being exposed directly to the price of shares and bonds, it is not possible toescape the price of food or energy. Commodity derivatives, in the form of contracts fixing a price for future delivery, pre-date financial markets. Commodity markets arose out of the legitimate needs of producers and consumers of raw materials, agricultural products and energy to protect themselves from the influence on prices of factors beyond their control. However, the growth of financial markets has meant that, over the last decade or so commodities have joined bonds and shares as "investment assets". Developments in commodity related markets are critical and need to be thoroughly monitored and regulated to prevent dramatic situations such as the hunger riots in 2008 where unprecedented levels of food commodity price volatility created a tangible and immediate threat to fundamental human rights of a significant part of the world population. The exacerbated commodity market volatility and price levels that seem unrelated to fundamental extraction costs and the balance between supply and demand over the last ten years has generated devastating and long lasting negative externalities which are potentially much bigger than the total amount of official development aid over the same period.

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TIME DESCRIPTION DURATION
00:00:00 TITLE 00:00:05
00:00:05 EXTERIOR SHOT of the European Parliament, Strasbourg 00:00:05
00:00:10 SOUNDBITE (German) Markus FERBER, MEP (EPP, DE ), Rapporteur English translation : "It has to be noted that in recents years financial markets have altered, but it's in the interest of the Parliament to ensure that all trade in securities is subject to rules." 00:00:16
00:00:26 SOUNDBITE (German) Markus FERBER, MEP (EPP, DE ), Rapporteur English translation : "One thing that we didn't focus on previously MiFID was algorithmic or high frequency trading. Again we wanted to have clear rules. This is a very dangerous area which can be clearly manipulated and we wanted therefore to establish stringent rules with minimum trade periods with the possibility for circuit breakers, test for algorithms to look at the structure of algorithms and to have a minimum price and a proper fee structure. 00:00:38
00:01:04 SOUNDBITE (French) Michel Barnier, European Commissioner inn charge of internal market and services English translation : "Derivatives markets in commodities : this are not financial markets like other markets, because they have to do with consumers in their daily lives, and we do know that in some developing countries this affects food security of a large part of the population. I think speculation in the commodities, food commodities in particular and the difficulties it can cause with regards to food security in some countries is an unacceptable situation. " 00:00:32
00:01:36 SOUNDBITE (French) Robert GOEBBELS, MEP (S&D, LU) English translation : "About high frequency trading : how can you establish the market price when you've got millisecond trading undertaken by computers, milliseconds now who will be micro or nanoseconds in the future. That speed does not deliver gretar liquidity, Commissioner. High frequency trading does not deliver any liquidity to the market. 80% of orders only exist for a few seconds, and high frequency trading amount to 80% of all trading on certain markets. But if you look at the actually executed orders, it's only about 20 or 25% of all orders on the stock exchange. Curbing this speculation which is more and more impenetrable will help investors in the long term and will penalize those who are going for short term profits. Financial markets are necessary, but they have to serve the real economy." 00:01:09
00:02:45 SOUNDBITE (English) Roger HELMER, MEP (EFD, UK) "The UK is home to over 36% of the EU's whole sale financial market. It dominates Europe financial OTC trading and has a central role in foreign exchange and inter- bank money. These two reports represent an attack on that position . Such detailed micro-regulation can only drive up costs and make OTC products less attractive. EU regulators who now control these matters know this perfectly well and that is why they are doing it. " 00:00:31
00:03:16 SOUNDBITE (German) Hans-Peter MARTIN (NI) "This was not so much Zarathoustra speaking than "Here is the City of London speaking". We need to stop that. Remember what Commissioner McCreevy said, he talked about what could be done with MiFID and here the majority said "no, that's not the way". In the meantime, 2 billions, 3 billions, I don't know how much, has gone up in smoke, because of under-regulation." 00:00:42
00:03:58 SOUNDBITE (English) Arlene MCCARTHY, MEP (S&D, UK) "Across Europe, consumers have been victims of mis-selling of investment advice because of this perverse incentive in the commission inducement system which creates a bias towards products paying a highest level of commission and away from the best interest of client or the investor. Studies from the German institute of consumer policy show that disclosure and transparency does not work and evidence is given that consumers does not trust the independence or the advise if inducements are paid to push that particular product; So a ban is the only way to remove this conflict of interest and give strong protection to the investor." 00:00:36
00:04:34 CUTAWAYS : 6 shots 00:00:24
00:04:58 END 00:00:00
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