The European Parliament today endorsed new rules for share trading aimed at boosting competition between banks and exchanges in the European Union and giving investors more choice when buying securities.
The bill, the Investment Services Directive, will allow brokers across the 15-nation EU to bypass stock exchanges by processing buy and sell orders directly with clients, a practice common in Britain and Germany.
"This directive is . . . central to the EU's economy as a whole," Mr Christa Randzio-Plath, the chair of the Parliament's Economic and Monetary Affairs Committee, said in a statement.
"In particular, it helps market transparency and liquity of markets in the interest of retail and institutional investors."
But some banks claim their competitiveness will be hampered by a requirement to disclose their bid and offer prices for orders up to a certain size before the order is executed.
"The condition for eliminating the "concentration rule" [that confines share trading to stock-exchanges] are too onerous for any investment firms to have a real business case for in-house trading. This may not lead to more competition," said Mr Asuncion Caparros, head of the EU liason office of ABN-AMRO.
The bill also needs approval by EU member states to become law. EU diplomats said some countries have already indicated they will contest some of the measures endorsed by parliament.