This year is "crunch time" for financial services in the Europe Union. Officials at the European Commission are working flat-out to implement ambitious plans to create an integrated, continent-wide single market. The idea behind the so-called Financial Services Action Plan (FSAP) is to promote competition and efficiency across the 27 member states. A great idea; only it's unlikely to work.
Let's look at one of the main problems Brussels is trying to resolve. A cluster of "Club Med" countries, notably France, Spain and Italy, have traditionally insisted that all securities transactions must be funneled through domestic exchanges. So currently, if one wants to trade shares in a company registered on the Spanish bourse, for example, one must do so through a member of the Madrid stock exchange. One of the core pillars of the Commission's financial action plan, the seemingly innocuous acronym MiFID (Markets in Financial Instruments Directive), is designed to change that. MiFID would abolish this monopoly and enable trading in such shares to be spread between many more venues, such as platforms set up by investment banks, thereby delivering greater choice and lower fees to consumers. It would also introduce far greater transparency and consumer protection standards than has generally been the case in many EU national markets.
That's the theory. But these promised benefits may prove elu