Third party equivalence under MIFID II has become a hot topic. The European Commission has no time to waste.Read More
I'm supposed to be doing lots of other things right now. But to be honest, I'm too disappointed to focus. A lot of things were lost in electing Trump, including the little faith I had left in the common sense of the electorate after the Brexit vote.
In an earlier article on Brexit, I already wrote that the Brexit vote was part of a bigger trend which included the rise of populist politicians in Europe and Trump in the US. A new reality is settling in and it will have a huge effect on people but also on market structures.
Leaving personal feelings aside, as well as the effects this election will have on the environment, human rights, the economy and basic human decency, let's take a look at how this election may affect market structure.
Throughout the campaign, Trump was not very clear on policies he would bring in his administration. But he was crystal clear on the fact that he absolutely loathes regulation. He feels regulation is killing business and entrepreneurship. Now, Wall Street never fully jumped on the Trump train but now that his reign is starting they will make lemonade out of this lemon and kill as much regulation as they can. This means Dodd-Frank will be in the cross hairs of Trump and the SEC and CFTC can already plan to cut their budgets.
Now, if US regulation comes under fire, Europe will take another hard look at the European equivalents, MIFID and EMIR. If the trend of populism and isolationism will continue in Europe, we can assume that European regulation will come under heavy scrutiny by newly elected Euro skeptic parties. Combine this with the UK exit and the trend in the US and you can wonder if the European financial industry should become the most regulated market in the world. Don't get me wrong, regulation in essence is a good thing. But if the rest of the world is turning into a 'free for all', having MIFID will be like competing in a swim race with your hands tight to a 50 pound boulder.
So, in the words of the guy who predicted the Cubs winning in 2016 in his 1993 yearbook, you heard it here first: In this new reality, MIFID II might be dead before arrival.
Agree, stronly disagree or do you predict other effects? Open for discussion in the comments.