It is often thought and said that the proposed changes to the regulatory frameworks in Europe and the US – MiFID and Reg NMS – are much the same. In fact, they are derived from markedly different philosophies, and are frequently misunderstood. Or so say financial research consultants Celent in a new report that outlines the similarities and differences between the two regulations, and tries to identify the opportunities created.
The report, entitled “Major Changes in US and European Equities Markets: Comparing MiFID and Reg NMS,” is written by Octavio Marenzi, CEO of Celent. It examines the most important components of Reg NMS and MiFID and discusses the resulting market structures, including:
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Best execution requirements
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Market data
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The role of exchanges and concentration rules
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Conduct of business rules
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Unbundling
Although European markets generally tend toward greater regulation than US markets, the roles here are reversed, says Marenzi. “Underpinning the European Commission’s approach is a belief that regulators are not well-positioned to design market micro-structure, but should leave this to market forces. The SEC is taking a far more hands-on approach, with a level of detail and complexity that is sometimes surprising,” he says.
In addition to comparing and contrasting the regulations, the report examines where new business opportunities lie for market participants in the following areas:
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Sales of market data
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Algorithmic quoting
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Internalisation
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Execution services