Industry has backed proposed rule changes aimed at keeping props outside the scope of draconian capital rules
Capital Requirement Regulation (CRR) over proprietary trading
firms - one of the so-called "unintended consequences" of Mifid
II - raised its ugly head last week, with the Futures Industry Association (FIA) issuing
a position paper on the issue.
The paper included proposed changes aimed
at keeping prop firms outside the scope of the
EU’s stringent capital rules, a scenario that
could prove disastrous to European market liquidity.
In effect, should CRR remain unchanged,
Europe’s market makers will be hit by the same
stringent capital requirements as banks when Mifid II comes
into force in January 2017.
The paper, published by FIA subsidiary,
the European Principal Traders Association (Epta), was
submitted to the European Banking Authority (EBA) as part of
its on-going review of CRR.
The regulator is due to present its final
report along with technical advice on proposed changes to the
regulation to the European Commission in September.
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