By Huw Jones

LONDON, April 13 (Reuters) – Banks and brokers in the¬†European Union that manage share trades for clients in-house to avoid the cost of using a stock exchange face a crackdown under reforms proposed by the bloc’s regulators on Tuesday.

Bourses have been lobbying supervisors for months to impose tougher rules on their off-exchange trading rivals, particularly crossing networks inside big banks that match share orders even though it represents a fraction of the market.

The EU is reviewing its markets in financial instruments directive, or MiFID, which has sparked cross-border competition in trading since its introduction in 2007 but at the cost of fragmenting share prices for investors.

The Committee of European Securities Regulators (CESR)

launched a consultation on three sets of draft advice to the EU for reforming MiFID later in the year.

“Ensuring that the regulatory framework keeps pace with the changing shape of financial markets is key,” CESR Chairman Eddy Wymeersch said in a statement.