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What’s happening in markets today and what is MiFID II?

by | 3 Jan, 2018

European markets move up but the FTSE100 struggles as new EU financial market regulations come into effect

What’s happening in the markets this Wednesday morning and what is MiFID II?

European indices opened higher this morning and are led by the DAX30 nearing 13,000 points at 12,912.

Retail stocks have moved higher after posting strong christmas sales. In the UK, Next, Marks & Spencer and Associated British Foods were 3 key risers.

Clothing and home-goods firm Next (#nxt) posted sales which rose 1.5% in the 54 days to Christmas Eve while online business was up 13.6% in the same period compared to last year. Higher inflation figures in the UK are squeezing consumers, so this is great news for the company amidst a difficult financial environment.

Associated British Foods (#britfood) is up nearly 3% too after Deutschebank reiterated a ‘buy’ rating for the stock, citing a potential upside of 9.38%. The FTSE100 is Europes worst performing index so far today thanks to a stronger Pound, higher against the Euro at €1.1283.

American markets kicked off the New Year strongly yesterday with the Nasdaq moving up by 1.50% at the close, the S&P up 0.83% and Dow Jones up 0.42%. Futures for the main indices are all looking positive today too, so expect a stronger open when trading begins on Wall Street later (2.30PM UK time).

Amongst Asian indices, the Shanghai SSE Composite finished highest at the close (3,369 points) tailed by the FTSE Hong Kong and South Korean KOSPI (up 0.28% and 0.27% each).

MiFID II in focus

Starting today, new rules will become enforced which will alter how trading is conducted across Europe.

The MiFID II (Markets in Financial Instruments Directive II) is a large set of regulatory reforms created by the European Union which are designed to offer more protection for investors in financial markets. The new rules will increase transparency in all asset classes from stock trading to forex trading, and will affect large swathes of the financial infrastructure including banks, stockbrokers, hedge funds, financial advisers and investment managers in all member states of the EU.

Some of the new rules include:
– Investment banks now have to charge separately for research and brokerage services to avoid conflicts of interest.
– New limits on trading in ‘dark pools’ (as opposed to ‘public’ markets like the DAX or FTSE100).
– Financial institutions have to report information about most trades immediately including price and volume, keeping them more accountable.

Amazingly, the finished document is over 7,000 pages long, so not exactly the most easily digestible set of regulations, as it has been in development for close to a decade.

The original version of the MiFID was conceived in 2007, but its beginnings coincided with the start of the global financial crisis, and it was decided it would have to be updated with more guidelines to broaden its scope outside of just equity markets alone.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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