BPFI has recently submitted a detailed response to the European Commission’s consultation on integrating EU capital markets. As Ireland’s voice for banking and investment firms, we fully support the EU’s ambition to build deeper, more liquid, and globally competitive capital markets.
To realise this goal, we believe the EU must foster a stronger investment culture underpinned by pragmatic, risk-based supervision. Regulation — when well designed — can drive market resilience, spur innovation, and deliver better outcomes for end investors.
Our key recommendations:
- Proportionality matters: The EU regulatory framework should be better tailored to the actual risk profile of different firms, like investment firms. This would support the international competitiveness and attractiveness of EU markets.
- Harmonise post-trade infrastructure: The EU must focus on standardising post-trade processes in order to reduce costs, increase efficiency, and support true cross-border activity. As part of this, it is crucial that barriers to settlement interoperability are removed and that policymakers look to fully implement the European Post-Trade Forum’s 2017 recommendations.
- Prohibit single market maker arrangements: We believe the EU needs to take a firm position and prohibit the use of single market maker arrangements that are permitted in certain EU Member States. These setups are anti-competitive and offer little benefit to retail investors. Real price competition can only emerge when multiple market makers are permitted to compete openly.
- Harmonising regulatory requirements & supervisory outcomes are essential: It should not matter where in the EU a firm is located, but rather that the same rules and level of supervision are applied to ensure a level playing field. To help achieve this, we support EU legislation in the form of Regulations over Directives and the elimination of domestic requirements, which only fragment the single market. Additionally, we see merit in granting ESMA direct supervisory powers over large EU infrastructures considering many are already overseen by a college of supervisors.
- Tackle costs of market data: Rising costs and opaque pricing of market data pose real barriers to entry and only serve to make EU markets less attractive. The costs of market data must be improved to support competition and enable participation across the market.
- Reinstate open access for listed derivatives: The recent removal of MiFID II’s open access provisions was a missed opportunity. Reintroducing these rules would promote choice, reduce systemic risk, and help reverse the decline in European derivatives trading.
- Strengthen best execution: The EU should avoid adopting a US-style Order Protection Rule and instead enhance MiFID II’s Best Execution regime. We believe this will better preserve market quality while avoiding unnecessary complexity.
BPFI looks forward to working with policymakers to build a more competitive and inclusive capital markets ecosystem as these important discussions continue over the coming months/years.
View the responses in Targeted consultation on integration of EU capital markets Part 1 and Targeted consultation on integration of EU capital markets Part 2.
