ECONOMY

Cheaper shares trading, loans

New European Union rules aimed at cutting costs for investors will come into effect in Greece from January next year, Finance Minister Giorgos Alogoskoufis said yesterday. The Markets in Financial Instruments Directive, or MiFID, seeks to boost competition between banks and stock exchanges in share trading, and the government is due to submit a bill to Parliament today, in line with the directive. The European Commission wants all EU states to have the same rules and to avoid national add-ons that may hinder cross-border competition or bump up compliance costs. «The new MiFID rules will be applied in Greece from January 1, 2008,» Finance Minister Giorgos Alogoskoufis told reporters. Under MiFID, an investment firm approved to operate in one EU state will have a «passport» to operate across the 27-nation bloc under home country supervision. In late June the Commission gave 24 European Union countries a final warning for being late to introduce MiFID which is due to come into force on November 1 and forms the cornerstone of the EU’s single market in financial services. It provides for transactions in shares outside bourses. The bill being submitted today also includes provisions for the phased abolition of the 0.15 percent stock market transactions tax and of the stamp duty on insurance services, as well as changes in property taxation. «Our intention is to abolish as many as possible transaction taxes, which are distortive,» said Alogoskoufis. Athens Exchange President Spyros Kapralos told the same press briefing that commission charges by stockbrokerages to investors might be further reduced. «We have already reduced commission charges by 33 percent since the beginning of the year. This does not mean we may not reduce them even further.» The reduction in the cost of bourse transactions is designed to increase competitiveness, in view of the fact that share trading will now be allowed outside the bourse. Tailor-made rates The Finance Ministry today is also introducing a second bill with provisions which will enable banks to tailor lending rates according to each client’s individual credit rating. The bill harmonizes Greek legislation to the new global rules on banks’ capital adequacy under the Basel II Accord. Under the new rules, there is no single rate for forming provisions for a bank’s entire loan portfolio. Risk will be graded for each loan granted, and the lower the risk the lower the capital provisions will be. «As a result, they will have the potential of offering lower lending rates, or generally more favorable lending terms to the benefit of their more consistent clients. This will improve competition in the banking system and have more favorable effects on the economy as a whole,» said Alogoskoufis. (Kathimerini, Reuters)