EU to come down on bank conflicts of interest

15 December 2006

Investment banks will face tough new rules on conflicts of interest in Europe next year.

Next November the European Markets in Financial Instruments Directive (MiFID) will come into force making investment banks separate equity research and corporate activities to reduce conflicts. There will also be greater disclosure of potential conflicts.

It is hoped the regulations will stop a repeat of the dot com collapse of 2000, which was seen in part down to biased stock recommendations.

Yesterday the European Commission (EC) issued practical guidance on MiFID, with a communication on investment research.

Internal market and services commissioner Charlie McCreevy said: "Since the collapse of the 'new economy' bubble in 2000 and several subsequent high-profile corporate collapses, the value and integrity of investment research, has been under increased regulatory scrutiny globally."

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