U.S. Banks Prosper with "The MiFID II Effect"

U.S. Banks Make Hay of European Trading Rules Goldman Sachs and Morgan Stanley gain from consolidation in equities tradingBy Paul J. Davies – wsj.com – October 19, 2018, at: https://www.wsj.com/articles/u-s-banks-make-hay-of-european-trading-rules-1539938668 

A thought: Consolidation? More likely it’s changes in trading concentrations. Those institutions that can trade in the less regulated environment (the U.S.) are increasing the trading done in the U.S. - with U.S. Broker / Banks. This trading venue adjustment is increasing volume and profitability of brokerage trading for U.S. institutions

What is MiFID II? The objective of MiFID II is to force institutional investment organizations, trading in the E.U., to make clear and transparent disclosure of their uses of client brokerage commissions and to itemize the costs of trade execution and disclose and price "research acquisition costs" and other uses of clients' brokerage commissions. The amount institutional investment firms pay-up (using clients’ money) above the costs of transaction execution is known as "institutional soft dollar brokerage".

In 2003 to 2007 the S.E.C. studied Section 28(e). After the SEC studied soft dollar brokerage in depth. Then Chairman of the S.E.C., Christopher Cox, sent letters to then chairmen of the Senate and House banking committees (C. Dodd and B. Frank). In his letters Christopher Cox requested that Congress revise or rewrite Section 28(e) of the Securities Exchange Act of 1934. This section of The Act provides the safe harbor for soft dollar brokerage. See Christopher Cox' letter at: https://www.scribd.com/doc/13752510/Cox-Requests-Legislative-Action

Senator Charles Shumer (D. NY) a well-known friend of full-service brokerage and investment banks, vehemently opposed any changes to section 28(e).  In letters, Shumer attacked Christopher Cox.

I’ve often wondered . . . if the above linked letter may have been the catalyst for Christopher Cox’ departure from the S.E.C. And, I wonder if Christopher Cox was aware of the George W. Bush’s family’s long history and connections to the brokerage industry. Cox was appoint to the S.E.C. by President George W. Bush.  

For more, see: The End of "Soft Dollars"? By John C. Bogle   pub. financialanalystsjournal.com – 2009 #2, at: https://www.scribd.com/document/119339073/Bogle-End-of-Soft-Dollars-FAJ-2009-Nr-2