Another prime anti-business EU regulation is ‘Double Volume Caps’ which have a major impact on UK companies with large trading volumes by stopping sizeable trades. This targets the UK stock market liquidity and is strangling the London markets – just what the EU wants?
Institutional managed funds are now becoming too large to invest in SME companies and safely on public exchanges. Yet Mifid regulations, as well as suppressing liquidity on major markets, then restrict the amount of alternative trading that funds can do in dark pools.
The regulatory squeeze is now pushing smaller companies towards other non-listed forms of capital raising and pushing private clients into collective investment products. A streamlining of the whole system will protect and inform consumer choice without increasing the cost of investing.
The Government should be encouraging the management companies of large funds to be based in the UK in the same way as the EU use Dublin or Luxembourg through VAT incentives. A potential opportunity for the North.
Investors should not be mollycoddled by intrusive regulations but have financial education available to help them understand -“Caveat Emptor” (let the buyer beware).
Even some UK based law firms have found it lucrative to wallow in these EU regulatory complexities, perpetuating malaise by presenting their clients with imperfect solutions and the prospect of on-going jeopardy. Global financial service companies will pursue international regulatory “equivalence” which is fine, but the EU should no longer be able to weaponise it at the expense of one of our most important markets.
This legislation is a straitjacket for the City of London, made deliberately obtuse so that we won’t realise until it is too late.
Not only is the City being neutered by Mifid I and II but small entrepreneurial firms from all over the country are being starved of equity finance to develop their businesses. It is a pity that most of our elected politicians and their advisors have little understanding of this complex subject. There is no point in leaving the EU unless we also release the spirit of genuine risk-taking to allow our creative genius to thrive.
Time for Gulliver to break free of the Lilliputian ropes and, yet again, save Europe from itself.