The European Banking Federation (FBE) has criticised the EU's controversial directive on markets in financial instruments (MiFID) for being "too complex, cumbersome and restrictive".
In a paper submitted as part of the European Commission's consultation on MiFID, the FBE criticises the Commission for not undertaking a full cost-benefit analysis, particularly with regard to plans to force banks to reveal to the market details of large equity positions they have taken. The FBE says the proposed rules are too complex and restrictive and also warns that "investment firms which have entered into risk positions will be in danger of the market turning against them if they are unable to unwind their positions rapidly".
The association - which represents 4500 financial firms from 27 countries - also criticises proposals to force banks to maintain a record of their quoted prices, saying the move would "significantly add to the overall cost of operating a systematic internalisation system".
The FBE's comments echo those made by last month by Sir Callum McCarthy, chairman and acting chief executive of the UK's Financial Services Authority (FSA), who said the proposals would "impose significant costs on the UK market" and that it was "deeply unsatisfactory" that MifiD had not undergone a full cost-benefit analysis.
Analysts estimate that capital markets firms will be forced to spend up to EUR1 billion on technology to achieve compliance with the new rules, which are scheduled for introduction at the end of April 2007.