The FOA has spelled out its concerns in a response to a consultation document issued by Brussels in October that tabled a wide set of reforms to the Markets in Financial Instruments Directive, dubbed MiFID II.

As well as reigning in dark pools and high frequency trading activities, the MiFID review document also called for a ban on trading in more 'speculative' commodities and demanded more transparency in over-the-counter trading and a switch to exchange-based systems and a new category of 'Organised Trading Facilities'.

The FOA warns that the weight of additional obligations and requirements placed upon firms by the reform process could be duplicative and unnecessary and that the impact on a "thinly-staffed" European Securities Markets Authority (ESMA) will be intense.

Among the specific areas within the review, FOA suggests that the role of speculators in commodity markets is critically important and excessive speculation should be dealt with through position management rather than position limits. It also calls for commercial purpose physical forward and spot transactions to remain outside the MiFID scope.

The use of product bans, "will have severe implications for the function of markets" warns the lobby group "and may even exacerbate risk to the financial system".

FOA chief executive Anthony Belchambers comments: "A number of the requirements in the review are needlessly oppressive, particularly the proposed limits on execution-only business and bilateral execution. Additionally, the swathe of costly disclosure obligations is more likely to confuse than inform customers."

Similar objections have been aired by the International Capital Markets Association in a separate submission, which urges the Commission to "adequately consider the full implications of the proposals set out in the paper rather than trying to rush the consultation process, which could result in costly mistakes arising from unintended consequences".

In particular, Icma has called on Brussels to exclude the money markets from the broad review and to resist the urge to "future-proof" the Directive.

"We would strongly warn against trying to make MiFID future-proof if doing so results in the Directive becoming unworkable in practice or imposing such significant regulatory burdens that the barriers to entry become prohibitive for all but the largest firms/participants."