Reforming Securities and Derivatives Trading in the Eu: From Emir to MiFIR

Abstract

The financial crisis has generated a deep revision of the regulation of securities and derivatives markets. In this paper, we critically examine the extent to which current reforms, such as the European Market Infrastructure Regulation and the proposed new Markets in Financial Instruments Directive and Regulation, will expand “public” securities and derivatives markets, while correspondingly reducing the scope of “private” markets (which broadly coincide with the “unregulated” over-the-counter markets). We also ask whether these reforms will on the whole reduce systemic risks and transaction costs of securities and derivatives trading in Europe. For these purposes, we formulate conjectures that are partly based on the experience of past reforms in the area of equity trading.