Payment for research and unbundling has been on the European regulatory agenda for some time. It has now escalated to a cross-border issue after
concerns were raised with the US SEC by a senior US politician worried about the impact on US growth industries. The recent past gives us plenty of examples of cross-border issues from both sides of the Atlantic – the
US person under Dodd-Frank, the proposed
QMTF for European firms, the recognition of
US CCPs under EMIR, or the question of whether the “exemption from the exemption” implies that all DMA users across the globe fall within the scope of MiFID II.
This list is likely to grow once MiFID II details are finalised within the next couple of months, as local regulators tussle with the reality of global markets. However, as long as the political will to recognise equivalence between jurisdictions is lacking,
and common sense is not allowed to prevail, rules will only get more complex.
CFTC Commissioner Giancarlo hit the nail on the head when commenting on the recently proposed rules for cross-border margins, cheerfully pointing towards the expected growth in the US economy due to “thousands of billable hours that will be expended by
lawyers and other professionals, who will have to read, interpret and respond to this tangled regulatory construct “. Something of a boost to economic growth, but possibly not the kind we were hoping for.