Many EU states face legal action over MiFID

By Huw Jones

BRUSSELS (Reuters) - The European Commission is preparing legal action against many European countries for failing to introduce sweeping new financial services rules into national law on time, an EU source said on Thursday.

Data provided by the EU executive showed that only three of the bloc's 27 members -- Britain, Ireland and Romania -- met the January 31 deadline for transposing the Markets in Financial Instruments Directive, or MiFID, into national law.

"It is expected that within the next few weeks infringement proceedings will be started against countries that have not transposed MiFID," the EU source said.

The European Commission declined comment.

The source said it was unclear when the cut-off point would be for determining which countries faced legal action as some states are due to transpose the rules this month or in May.

Legal action involves a three-stage process that ends in the European Court of Justice, which has powers to fine a country and force it to change its laws.

The rules form the cornerstone of the bloc's single financial services market and go live in November.

The aim is to cut the cost of cross-border buying of shares for investors and allow investment firms to compete anywhere in the bloc.