In a working paper published at the beginning of April, the Federation of European Securities Exchanges (FESE) insists on the need for substantial adjustments to the European market infrastructure and supervision reform package ‘MISP’ (see EUROPE 13825/24). The organisation welcomes a “timely and important initiative” to strengthen the integration and competitiveness of EU capital markets, but believes that the legislative proposal, as it stands, fails to address some key structural imbalances.
At the forefront of these concerns is the lack of in-depth reform of the structure of the equity markets. “Equity market structure reform is essential, but is missing from the MISP,” regrets the FESE, which represents European regulated market operators.
The Federation warns against increasing fragmentation linked to the development of bilateral off-exchange transactions. In its view, this trend weakens the transparency and quality of price formation and calls for a rebalancing of the regulatory framework in favour of transparent multilateral markets (known as ‘lit’ markets), which are considered essential for supporting initial public offerings and corporate financing.
With regard to the other aspects, the Federation supports the objectives of integration and regulatory convergence, but asks that excessive complexity of the supervisory framework be avoided, particularly through overlaps between national and European authorities.
Finally, the FESE is in favour of innovation, particularly around distributed ledger technologies (‘DLT’), provided that their development takes place within existing regulatory frameworks rather than in parallel regimes.
See the working document: https://aeur.eu/f/lj1 (Original version in French by Bernard Denuit)