MiFID II should not adopt a universal approach for addressing faults in market segments, but should be more product-specific in its method (a précis of the findings).
The report highlights certain incursions that MiFID II may cause, based on the amendments to MiFID, as outlined in the EC consultation paper. A salient change is that legitimate hedging of positions by corporate and institutional investors will become more expensive and impact liquidity levels. The report also tackles the transparency requirements that the MiFID consultation suggests, highlighting that its universal approach cannot be applied to all assets, as many of the instruments it covers do not share the same fungibility as, for example, equities. The report points out that it is not clear in how this rigid approach to transparency will be measured, and such an approach it will not be able to adjust to market movements, that are guaranteed certain to happen.
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