LONDON: Banks on Thursday welcomed the European Union's decision to delay rules for failed stock and bond trades, urging policymakers to fundamentally reform the disputed regime.

       EU rules for settling securities, the final leg in a trade, includes mandatory buy-ins, meaning the buyer of securities has a right to find a third party like a securities depository to supply them if the original seller fails to deliver the securities.

       The side of a transaction responsible for failure to deliver securities would have to pay any difference in price between the original transaction price and prevailing market prices, which could be costly during turbulent trading.

       Failed trades are currently sorted out informally between the two counterparties.

       EU financial services chief Mairead McGuinness said she welcomed a decision by the European Parliament and member states to postpone mandatory buy-ins, which were due to come into effect next February.

       The Association for Financial Markets in Europe (AFME), which represents banks and investment funds, said buy-ins would lead to a more expensive and less efficient capital market for issuers and investors.

       A planned review of the settlement rules next year should fundamentally reconsider mandatory buy-ins. - Reuters