Huw Jones

LONDON, (Reuters) – “Payment to order flow”, a practice that critics claim has fueled frenzied retail stock trading on Wall Street, should not be allowed in the European Union. France’s stock exchange regulator stated on Thursday.

The United States has stockbrokers that offer zero commission, which means the payment comes from the wholesale market.

Robert Ophele (chairman of France’s AMF Securities Watchdog) said that the EU lacks a single market regulator made the situation even more complex.

Ophele said that “I strongly favor the clarity of a prohibition for payment for orders flow,” at an event hosted by AFME (European markets industry body).

As Britain leaves the EU, the EU is reexamining its Securities Market Rules (MiFID II) with a view of making some tweaks to improve its capital markets.

France is the President of the EU for the First Half of 2022. It will now be in charge of coordinating reforms throughout the bloc.

To make it easy for investors to find the best deals, the EU’s Executive European Commission stated that it would like to establish a “consolidated tape”, or record of the transaction prices of shares traded within the bloc.

However, there are still questions about whether transactions prices should be made public in near real-time, or if they should be delayed for 15 minutes as the exchanges request nL8N2R04BU

Ophele stated that investors should be closer to the real-time.

Ophele stated that if Ophele simply said “Let’s have some delay”, it would not make things easier for users of the consolidated tape.

The EFAMA, a pan-European fund industry association said that a real time tape is essential for increasing retail investor confidence and asset managers’ ability to optimize their trading strategies.

Ophele stated that he hopes EU reforms to increase the quality of data on stock markets will be implemented by January 2023.

The banks argue that, once the data quality is better, calls by bourses for curbing off-exchange trades (or over-the counter dealings often conducted via banks) will no longer be justified.