US and Chinese firms could flee City if EU rules are not changed

 
Tim Wallace
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THE CITY could take a major hit if planned EU derivatives rules are forced through, an influential House of Lords committee warned today, as international investors could be driven out of the UK and EU.

The markets in financial instruments directive (Mifid 2) “could lock third country firms out of the EU markets, which would have an extremely damaging effect on European financial markets, including the City of London,” said the EU Committee’s report, accusing the European Commission of rushing the proposals.

Companies from outside the EU will be required to set up a branch in the EU to provide investment services or activities to certain clients in the EU, and the Commission will only allow this if the firms’ home countries have rules which are very similar to Mifid – a tough requirement which the committee warns could drive away firms from China and the US.