EU share law faces key vote

Amateur investors could be frozen out

Members of the European Parliament (MEPs) will later on Tuesday vote on controversial European Union (EU) proposals which could make share trading prohibitively expensive for small investors.

The draft laws, aimed at protecting consumers from making ill-advised investment decisions, would oblige private investors to seek professional advice every time they buy or sell shares.

Campaigners argue that this would ramp up the cost of trading in equities.

According to ProShare - a UK-based organisation which promotes share ownership - buying and selling stocks could become up to twenty times more expensive for private individuals, driving many small shareholders out of the equity market altogether.

The laws could also sound the death-knell for many low-cost brokerage firms - so called execution-only brokers - that specialise in serving amateur investors.

Watered down

"It will not be good news if this particular measure goes through today," Diane Hayes, ProShare's chief executive, told BBC Radio Five Live.

The draft laws will be considered by a panel of expert MEPs on Tuesday, before being voted on by the full European Parliament later this year.

The proposals - including any amendments introduced at the parliamentary stage - will then be submitted for the approval of European Union finance ministers.

Opponents of the measure are hoping that the MEPs will introduce an amendment exempting trades carried out through execution-only brokers.

"What we don't want to see are suitability tests every time any investor wants to trade shares," said Ms Hayes.

Some MEPs have also spoken out against the proposals.

"This is just nanny statism," British Conservative MEP Theresa Villiers told Radio Five.

"There are a lot of very well informed and very expert people out there who are quite happy to take their own decisions."