Dear Editor
THE EU is still short of delivering a single common market for all goods and services, especially for financial services in which the UK has such a successful industry. But after seven years of detailed work, a major step forward has just been taken with the introduction of the “Market in Financial Instruments Directive” – already labelled in financial circles as Mifid. It will make investing in stocks and shares easier and cheaper, as well as boosting economic growth for all.

Mifid is a great achievement, and one of which MEPs can be particularly proud. An earlier draft, then called the Investment Services Directive, was initially bulldozed through the European Council of Finance Ministers by the Italians – who wanted to keep their own cosy financial arrangements intact – against the interests of countries such as the UK and Luxembourg who have highly advanced financial industries. Not for the first time, Gordon Brown as Chancellor had failed to attend. It then came to the European Parliament, and MEPs took it apart and rebuilt it.

New rules now agreed will sweep away many of the barriers within the EU that have made trading in shares an expensive hassle. They will enable financial firms to compete on a level European playing field, will compel them to get the best prices for their clients, and will outlaw national monopolies that have allowed certain stock exchanges to charge exorbitant fees. As the Wall Street Journal sums up: the cost of trading stocks in Europe should fall by an average of 25%, and maybe as much as 75%.

Some countries have been slow to implement the new rules, and as many as nine EU countries have yet to notify the Commission of their plans to transpose them into national law. Countries that are on time such as the UK will be ahead of the game. The Chief Executive of the Investment Management Association is confident that UK firms are well-placed to benefit from the post-Mifid world, adding that the regimes demanded by Mifid are in fact based on UK models. There is a cost: an initial outlay of up to £1 billion, plus annual running on-costs of around £100m a year because of additional paperwork, but this should be more than outweighed by the benefits.

The important thing is that such benefits should reach everybody, not just those who trade in shares. By opening up the market Mifid expects to speed up financial development across the EU, reduce the cost of borrowing so that companies can more easily invest, and thus increase EU growth by 0.75%. Such a change would boost living standards for everyone. Prime Ministers, rather than Brussels, will naturally take the credit. Philip Bushill-Matthews MEP Conservative - West Midlands Region


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