Wednesday, 2 February 2011

EU ban UK citizens from share dealing

Goal 89: To change laws for the better

Do you own shares in UK companies? Do you own a share dealing account which allows you to buy and sell shares?

If you answer yes to either of these questions then please read the following post today and decide whether to act on it.

The EU is currently considering changes to MARKETS IN FINANCIAL INSTRUMENTS
DIRECTIVE (MIFID)

Under these proposals, it is possible laws could come into force preventing UK citizens from buying and selling shares directly using an execution only account. Also, the proposals may prevent UK citizens from  trading on the UK AIM market and other less regulated markets around the world.

There are several sites which have some good information on these proposals so I won't try to repeat it:

http://www.fool.co.uk/news/investing/2011/01/24/eu-to-ban-internet-share-dealing.aspx
http://www.moneymarketing.co.uk/adviser-news/euro-threat-to-execution-only/1024454.article
http://share.com/mifidreview
e-mail opposition to:

markt-consultations-mifid@ec.europa.eu

Below is a copy of the email I have just sent. Please do not simply copy and paste as it is my own personal view but it will hopefully give an idea of why I feel strongly about this:

To markt-consultations-mifid@ec.europa.eu

I am a UK citizen and am writing to express my concern at the proposals contained within the MiFID consultation paper:
http://ec.europa.eu/internal_market/consultations/docs/2010/mifid/consultation_paper_en.pdf

To give you some background, I invest mainly in shares traded on the UK's AIM. I have a long term goal to increase my savings through these trades in order to build up a pension fund. My personal experience of 'managed investments' has been poor. In the 1980's I had a pension with Mirror Group which was stolen. My father took out a private pension and was told after many years that the value of the pension had shrunk by 66%. I invested £2,000 in a family bond for my children in the last decade and the value of this investment also went down, though only by a small amount.

It appears from your proposals that you believe that only qualified and regulated individuals and organizations should have the right to make high risk decisions when it comes to dealing in shares.

I fully accept that changes need to take place with regards to the financial problems of the last few years and yet none of these financial problems have been caused by individuals such as myself who use execution only trading accounts and who trade on less regulated markets such as UK AIM. Instead, these problems have been caused ONLY by financial institutions! Indeed, these problems have been caused by individuals within these institutions who are both qualified and regulated!

With regards to your proposals:

(87) What is your opinion of the suggested modifications of certain categories of instruments (notably shares, money market instruments, bonds and securitised debt), in the context of so-called "execution only" services? Please explain the reasons for your views.

I reject both option A and option B.

I would like the EU to protect my current ability to hold an execution only account which allows me to buy and sell shares without any interference and without any advice.

I would also like the EU to protect my ability to buy and sell shares in regulated and unregulated markets around the world. It is not for the EU to impose restrictions as to the level of risk I am willing to take.


(88) What is your opinion about the exclusion of the provision of "execution-only" services when the ancillary service of granting credits or loans to the client (Annex I, section B (2) of MiFID) is also provided? Please explain the reasons for your views.

Again, I would like the EU to protect my current ability to hold an execution only account which allows me to buy and sell shares without any interference and without any advice. Please see above for reasons.


(90) Do you consider that, in the light of the intrinsic complexity of investment services, the "execution-only" regime should be abolished? Please explain the reasons for your views.

Absolutely not!

I have lost money by trading shares on an execution only basis, but overall, I have made a substantial profit from my investments. I and my family have lost far more money from entrusting it to the very financial institutions that are supposedly qualified and regulated.

Ultimately, investment services at their heart are not complex. The complexity has been imposed through over regulation and directives.

Perhaps a simpler option would be to ban the selling of debt as this seems to be a root cause of our current financial crisis. If a company (or country) has given credit in the form of mortgages for example, they should be unable to sell that on in any form.

Regards

Mark Smith

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