UK Wealth Industry Association Declares Victory Over EU Share Dealing Rule
Tom Burroughes, Group Editor , London, 17 December 2013
A lobby group for the UK wealth management sector said yesterday it has secured a victory in killing a European Union rule that would have ended the UK’s system of share trading for individual investors, hitting a £600 billion industry.
A lobby group for the UK wealth management sector said yesterday it has secured a victory in killing a European Union rule that would have ended the UK’s system of share trading for individual investors, hitting a £600 ($978 billion) billion industry.
An article was removed from the text of the Markets In Financial Instruments Regulator, or MiFIR. This article would have required all transactions for individual investors, such as equity and bond trades, to go through a clearing house, effectively destroying the UK’s Retail Service Provider System, argued the Wealth Management Association in a statement.
RSPs are intermediaries which enable smaller investors to buy and sell shares alongside the major investing institutions. The WMA said these intermediaries offer private clients “protection from the vagaries of the order book and the volatility of the wholesale financial markets by supplying guaranteed counterparties and prices. They also provide private clients with the additional protection of operating under the rules of a stock exchange, and their deals go straight to settlement, by-passing the need (and cost) for netting and clearing”.
The industry body said it has “vehemently” opposed the EU proposal, joining other trade bodies and organisations such as the UK government and financial regulator over the issue.
“This is a victory for our continued use of the RSP and the UK system, ensuring that our model, although different from a large proportion of the EU, is still valued and allowed to flourish – enabling UK shareholders to continue to participate directly in UK plc as they have always done,” Tim May, chief executive of the WMA, said in the organisation's statement yesterday.
“A presumption had persisted among Europe’s regulators that all financial services could be categorised in the regulatory silos of wholesale and retail. Our members require access to the global financial markets (wholesale) in order to serve the needs of their individual clients (retail). Therefore this decision by the EU authorities is a welcome recognition of our industry, which manages some £600 billion for more than four million investors across the United Kingdom,” May added.
The Wealth Management Association was formerly known as APCIMS, and renamed itself this year to reflect wealth management’s profile. It represents 182 firms. Members manage around £600 billion of wealth.