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Federation of European Securities Exchanges

FESE

FESE represents 17 European securities exchanges operating regulated markets with transparent price formation and strict disclosure standards.

Lobbying Activity

Meeting with Pascal Canfin (Member of the European Parliament) and Euronext

10 Dec 2025 · Market Integration Package

Meeting with Martin Merlin (Director Financial Stability, Financial Services and Capital Markets Union)

27 Nov 2025 · Exchange of views on recent developments and future opportunities in the exchange sector

Meeting with Andrea Beltramello (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

19 Nov 2025 · SIU

FESE Urges Digital Simplification to Reduce Compliance Burden

14 Oct 2025
Topic — EU proposal to streamline digital rules in cybersecurity, data access, and AI.
Message — FESE requests excluding standard hardware and software from DORA's ICT services definition, limiting subcontracting layers to three levels, and allowing groups to consolidate incident reporting. They want crypto-asset service providers excluded from FIDA's scope since they're already regulated under MiCA.1234
Why — This would reduce administrative effort and compliance costs for FESE's exchanges.567
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Meeting with Jonás Fernández (Member of the European Parliament) and BANCO BILBAO VIZCAYA ARGENTARIA and Asociación Española de Banca

18 Sept 2025 · Saving and Investment Union and sectorial priorities

Meeting with Sirpa Pietikäinen (Member of the European Parliament)

17 Sept 2025 · Capital markets integration in the context of the European Savings and Investments Union (SIU)”

Securities Exchanges Warn Against Penalising Legitimate Energy Hedging Activity

16 Sept 2025
Topic — EU regulation requiring energy market participants to report trading positions to ACER.
Message — FESE requests excluding financial instruments already covered by MiFID II from new REMIT exposure reporting requirements. They warn against flagging mismatches between trading positions and physical generation as suspicious behaviour, arguing this misinterprets legitimate risk management.12
Why — This would eliminate duplicative reporting costs for derivatives already reported under MiFID II.34
Impact — Energy regulators lose a potential tool for detecting market abuse patterns.5
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Response to Delegated Act on RCB, determination of liquid markets for equity instruments, and PTRR services

4 Sept 2025

FESE welcomes the opportunity to provide feedback on the draft Delegated Act (DA) amending CDR 2017/567. This Delegated Regulation sets out the methodology and thresholds for determining when equity instruments are considered to have a liquid market. In this context, we believe that the proposals represent a missed opportunity to achieve a more impactful outcome in terms of enhancing transparency, as mandated by the Level 1. The definition of liquid market is pivotal to the transparency of EU equity markets. It determines the application of pre-trade transparency obligations for SIs and, in certain cases, of the use of the negotiated deal waiver (dealt within a percentage of a suitable reference price, being a percentage and a reference price set in advance by the system operator). In our view, the current thresholds proposed in the draft DA, which align with those previously suggested by ESMA, fall significantly short of actually fostering more liquidity in EU equity markets by increasing the amount of liquidity visible to investors. When looking at the number of stocks that would be deemed liquid according to ESMAs analysis, it represents a very small percentage of the overall stocks admitted to EU markets, hence we question how this will help improve market transparency at all. The exemptions for SIs from most pre-trade transparency requirements, resulting from the proposed definition of a liquid market (combined with the low proposed SMS threshold), are problematic. They may mislead both European and foreign investors into perceiving European liquidity as disproportionately low compared to the reality. Moreover, setting the thresholds at a level that enhances the visibility of EU liquidity is especially important now that the double volume cap is being replaced by a single cap, potentially leading to more frequent use of the negotiated deal waiver. For these reasons, we would have preferred an alternative approach with more appropriate thresholds based on further analysis, which could have had a meaningful and positive impact on transparency in EU markets. Greater transparency is essential to strengthening the competitiveness of EU capital markets and ensuring the success of the Savings and Investments Union.
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FESE urges lower capital charges for long-term equity investments

3 Sept 2025
Topic — The initiative provides technical rules supplementing the review of insurance sector prudential requirements.
Message — FESE requests lower capital requirements for long-term investments and recognition of direct clearing services. They seek consistent rules across banking and insurance sectors to remove investment barriers.123
Why — Lower capital requirements would boost stock market activity and liquidity for exchanges.4
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Meeting with Johan Van Overtveldt (Member of the European Parliament)

3 Jul 2025 · CMU report

FESE urges tax breaks for new EU investment accounts

26 Jun 2025
Topic — EU initiative creating a blueprint for investment products to boost retail market participation.
Message — FESE calls for an account framework allowing flexible financial instruments traded on transparent stock exchanges. They propose simple tax incentives and no minimum investment requirements to attract various households.123
Why — Mandating trades on stock exchanges would increase market liquidity and revenue for FESE member exchanges.4
Impact — Private trading venues would lose market share as trades are mandated onto transparent stock exchanges.5
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Meeting with Martin Merlin (Director Financial Stability, Financial Services and Capital Markets Union) and

19 Jun 2025 · Exchange of views between FESE and Commission representatives on FESE’s response to the Commission public consultation on market integration in the area of trading

Response to Savings and Investments Union: Directive fostering EU market integration and efficient supervision

5 Jun 2025

The Federation of European Securities Exchanges (FESE) believes that the success of the Savings and Investments Union (SIU), critical to addressing the persistent gap between Europes economic potential and its actual performance, will depend on progress across three interconnected pillars of EU capital markets: 1. stimulating investment and expanding capital pools; 2. addressing liquidity fragmentation and fostering transparency in EU markets; 3. boosting an attractive listing ecosystem. The SIU and the renewed focus on capital markets integration are timely and essential. The European Union has the talent pool, capital, and institutional strength to lead in this new erabut only if it can overcome the persistent fragmentation and inefficiencies in its capital markets. FESE welcomes the European Commissions Call for Evidence and the European Commissions consultation on the integration of capital markets. We view this as a unique opportunity to reframe the debate, challenge outdated assumptions, and propose solutions that reflect the realities of todays market structure. In this context, we assert that several of the Commissions proposals to integrate liquidity capital pools, as detailed in the consultation paper, are founded on a partial assessment of the issues contributing to the fragmentation of EU capital markets. For example, FESE does not believe the real issue preventing increased cross-border trading lies in accessibility to lit multilateral trading venues or the connections between them. The Commission should prioritise the key challenges and opportunities, coordinating closely with Member State policymakers. While some proposals may be well-intentioned, it is important to underline systemic problemssuch as limited demand for cross-border retail investment and the growth of non-transparent trading. It is therefore essential to first identify and address the real gaps affecting the functioning and competitiveness of EU capital markets. Any initiatives should undergo a thorough assessment before being tabled. In our view, the path to larger and more integrated capital pools lies in increasing the overall size and depth of liquidity. To that end, the Commission should rather concentrate efforts on introducing demand-side measures, addressing the existing issues in the bilateral and dark trading space, and strengthening primary markets. On the demand side, mobilising private savings is imperative to strengthen the capital markets ecosystem and can lead to a broader offering by retail brokers. Regarding bilateral and dark trading, the proliferation of alternative trading mechanisms created fragmentation and discriminatory access, diverted liquidity away from lit multilateral markets, reduced transparency and weakened effective price formation; a review of the dark and bilateral regulatory framework is necessary. Further, the listings ecosystem should be boosted to increase the appeal of EU primary markets and counter the structural trend of European companies listing abroad. Building a strong and resilient Savings and Investments Union requires a comprehensive roadmap, prioritising the most critical issues from the outset. We remain open to discuss any proportionate and targeted measures that could further enhance markets set-ups where genuine barriers persist, provided these deliver clear added value and do not duplicate existing infrastructure or impose undue complexity or costs. Please refer to the attachment for further insights into FESEs key messages in relation to this Call for Evidence, including on access to trading, the needed priority areas, supervision, and other topics such as open access and the consolidated tape.
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Meeting with Michalis Hadjipantela (Member of the European Parliament)

3 Jun 2025 · Event

Meeting with Tatyana Panova (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Euronext and

16 May 2025 · Exchange with trading venues on the integration of EU capital market

Meeting with Tatyana Panova (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

7 Apr 2025 · SIU Communication – Targeted Consultation on capital market integration and supervision

Meeting with Pascal Canfin (Member of the European Parliament)

14 Mar 2025 · Savings & Investments Union

Meeting with Maria Raffaella Assetta (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Insurance Europe and

4 Mar 2025 · EU financial services industry associations debrief on EU-UK Financial Regulatory Forum

Response to Savings and Investments Union

3 Mar 2025

The Federation of European Securities Exchanges (FESE) would like to highlight some key points it believes are crucial for the successful completion of the Savings and Investment Union (SIU). FESE represents 36 exchanges in equities, bonds, derivatives and commodities through 17 Full Members and 1 Affiliate Member. The exchange industry is at the heart of financial markets as our sector facilitates a third of all EU financing flows by operating transparent and public markets. Further information is available on our website here. The EU must leverage its capital markets and promote a market-driven financing system to boost long-term competitiveness and growth. The European Savings and Investments Union (SIU) should serve as a catalyst, advancing a new vision for the Capital Markets Union (CMU) that empowers EU businesses and citizens. The SIUs success will depend on progress in three interconnected pillars of EU capital markets: the supply side, the demand side, and market structure. Tackling challenges and seizing opportunities in these areas will require strong, coordinated action from policymakers at both the EU and Member State levels. Following the release of FESEs manifesto, C.H.E.C.K-list to Getting European Capital Markets in Motion (available here), this paper aims to provide further market insights and recommendations for a future roadmap. FESE policy recommendations 1. Boost an attractive listing ecosystem Enhance pre-IPO financing frameworks. For instance, the EIF could be provided with increased liquidity and an expanded mandate to facilitate public listings. Consider initiatives to foster regulatory alignment in areas such as dual listing, listing requirements, or a European prospectus. Simplify regulatory requirements. In particular, it is essential to enhance the attractiveness and accessibility of SME Growth Markets. 2. Stimulate investment and expand capital pools Reform national pension systems to adopt market-based pension funds as a standard practice. Offer straightforward cross-border investment and savings products for retail investors, such as an updated PEPP or a product similar to Swedens Investment Savings Account. Increase efforts to enhance the financial literacy of EU citizens. Review prudential ratios under Solvency II and Basel II and adopt a more flexible approach to investments in UCITS and equity infrastructure. 3. Tackle liquidity fragmentation and fostering transparency in EU markets Promptly reevaluate the current regulatory framework (e.g. MiFID II/R) to identify what needs to be improved for deepening and increasing liquidity. Strengthen and harmonise the authorisation, supervision and enforcement regime for SIs, and resolve data quality issues arising from OTC and SI trading To read further details regarding these suggestions, please consult the full paper in the attachment.
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Meeting with Cristina Dias (Cabinet of Commissioner Maria Luís Albuquerque), Larisa Dragomir (Cabinet of Commissioner Maria Luís Albuquerque)

12 Feb 2025 · Meeting to discuss market developments

Response to Single Market Strategy 2025

31 Jan 2025

The Federation of European Securities Exchanges would like to highlight some key points it believes are crucial for the successful preparation of the Single Market Strategy 2025. FESE represents 36 exchanges in equities, bonds, derivatives and commodities through 17 Full Members and 1 Affiliate Member. The exchange industry is at the heart of financial markets as our sector facilitates a third of all EU financing flows by operating transparent and public markets. Further information is available on our website here. The Single Market Strategy aims to complement sector-specific political initiatives, including the Savings and Investment Union (SIU). While significant progress has been made since the onset of the Capital Markets Union, the EU must further expand its capital markets to perform in line with its economic potential and be more competitive in the global economy. The SIU needs to reverse the overreliance on bank funding and mobilise the capital of European citizens. Often associated with weak listing activity and low market liquidity, EU capital markets require fundamental reforms to create deep and transparent liquidity pools. FESE proposes the following recommendations: 1. Boost the EU listings ecosystem The international competitiveness of EU capital markets is tied to the robustness of their primary markets as they are vital for enabling businesses to raise capital for expansion, innovation, and job creation. The European IPO market needs to get boosted with deeper pockets at the pre-IPO stage. The EIB can play a key role in supporting strategic sectors via private-public partnerships and an exit fund to facilitate public listings. Policymakers should explore streamlining regulatory initiatives to support primary markets, especially from a cross-border perspective. These could include an analysis of the appropriateness of harmonising listing requirements, including dual listing processes, and establishing a European Prospectus. To increase IPOs, the definitions of SMEs should be amended, allowing more companies to benefit from the advantages offered by listing on SME Growth Markets. 2. Improve market structure and transparency The challenge of reducing market fragmentation and fostering deeper liquidity pools lies in effectively implementing the original objectives of MiFID II/R of increasing transparency and shifting a larger share of trading flow into lit venues. The Commission should promptly reevaluate whether recent legislative reviews (e.g. MiFID II/R) are unintendedly leading to less visible liquidity and market depth for listed companies. MiFID II unintentionally enabled the proliferation of alternative trading mechanisms, predominantly dark pools operated by Systematic Internalisers (SIs) and some MTFs. The authorisation, supervision, and enforcement regimes for SIs should be strengthened and the data quality issues arising from OTC and SI trading should be resolved. 3. Increase investor demand Encouraging citizens to invest in capital markets requires measures to mobilise retail investors and redirect their savings from banks to capital markets. The EU should establish globally competitive and attractive pan-European products, inspired by examples such as the US 401(k) or the Swedish investment savings account (ISK). An upgraded Pan-European Personal Pension Product (PEPP) could play a pivotal role. The Commission can contribute by working to streamline a common policy direction for future pension systems. Member States could consider reforming national pension systems to adopt market-based pension fund enrolment as a standard practice. 4. Tax incentives Tax incentives are paramount to mobilise capital and to boost participation by citizens. Capital gains tax and other equity-related taxes for investors and corporates should be, if any, simple and low. An EU financial transactions tax (FTT) should be avoided.
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Meeting with Nathalie De Basaldua (Director Financial Stability, Financial Services and Capital Markets Union)

15 Jan 2025 · Exchange of views on transparency in securities markets, consolidated tape, the Securities and Investments Union, and the role of the new DG in FESE.

Meeting with Tatyana Panova (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Euronext and NASDAQ

14 Jan 2025 · RTS on equity transparency- negotiated trades

Meeting with Maria Raffaella Assetta (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Insurance Europe and

9 Jan 2025 · EU-UK Financial Regulatory Forum

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament) and Insurance Europe and

3 Dec 2024 · Savings and Investments Union

Meeting with Irene Tinagli (Member of the European Parliament)

19 Nov 2024 · Introductory meeting

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

27 Jun 2024 · FESE Manifesto / CMU

Meeting with Gilles Boyer (Member of the European Parliament, Shadow rapporteur) and Euronext and S&P Global

22 Jan 2024 · BMR

Meeting with Rasmus Andresen (Member of the European Parliament, Shadow rapporteur) and Insurance Europe and

12 Oct 2023 · ESG

Meeting with Mairead McGuinness (Commissioner) and

18 Jul 2023 · Distribution of Retail financial products

Meeting with Alfred Sant (Member of the European Parliament, Rapporteur)

28 Jun 2023 · FESE Convention 2023

Meeting with Eva-Maria Alexandrova Poptcheva (Member of the European Parliament, Shadow rapporteur)

26 Jun 2023 · Listing Act

Meeting with Sirpa Pietikäinen (Member of the European Parliament)

2 Jun 2023 · CMU, MiFIR review and Listing Act

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)

27 Apr 2023 · MiFIR, Listing Act

Meeting with Nathalie De Basaldua (Cabinet of Commissioner Mairead Mcguinness)

24 Apr 2023 · CMU and MiFIR negotiations

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness)

17 Apr 2023 · digital euro

Meeting with Alfred Sant (Member of the European Parliament, Rapporteur) and Association Française des Marchés Financiers

12 Apr 2023 · Listing Act

FESE Urges Level Playing Field in EU Benchmark Review

22 Mar 2023
Topic — Review of EU rules for financial benchmarks and their use by third-country administrators.
Message — FESE demands that any deregulation applies equally to EU and non-EU firms to maintain fair competition. They want strategic benchmarks defined by clear, objective criteria and favor opening EU ESG labels to international providers. FESE also recommends deleting redundant benchmark statement requirements.123
Why — This would reduce regulatory burdens and compliance costs for administrators of smaller financial indices.45
Impact — Supervisory authorities lose direct oversight of smaller benchmarks that are removed from the regulatory scope.6
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Meeting with Nicola Beer (Member of the European Parliament, Shadow rapporteur)

8 Feb 2023 · Financial Market Regulation incl. MIFIR/D

Meeting with Billy Kelleher (Member of the European Parliament, Shadow rapporteur)

25 Oct 2022 · ESAP

Meeting with Frances Fitzgerald (Member of the European Parliament, Shadow rapporteur)

21 Oct 2022 · European Single Access Point (Assistant on behalf of MEP)

Meeting with Ondřej Kovařík (Member of the European Parliament)

9 Sept 2022 · Markets in Financial Instruments Regulation

Meeting with Nathalie De Basaldua (Cabinet of Commissioner Mairead Mcguinness)

17 Jun 2022 · MiFIR (meeting with Rosa Armesto, FESE)

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union) and Euronext and

10 Jun 2022 · Consolidated tape

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

31 May 2022 · CMU and MiFIR Review

FESE Urges PFOF Ban to Boost Retail Investor Protection

19 May 2022
Topic — A legislative package aimed at increasing retail investor participation in European capital markets.
Message — FESE advocates for a new 'semi-professional' investor category and a total ban on payment for order flow. They also suggest moving small retail trades onto regulated 'lit' markets to ensure better prices.123
Why — Mandatory 'lit market' trading would increase the market share and revenue of traditional exchanges.45
Impact — Retail brokers relying on 'zero-commission' models would lose the revenue that currently subsidizes fees.6
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Response to Review of the regulatory framework for investment firms and market operators (MiFID 2.1)

21 Mar 2022

FESE very much welcomes the removal of the open-access provisions for exchange-traded derivatives, the prohibition of payment for order flow, and the removal of the exception to the exemption from authorization as investment firm for DEA users, which together will make markets stronger. However, some points deserve further reflection: 1. EU capital markets face a concerning reality: half of the trading is happening in the dark. The renewed dark trading cap suffers from the same limitations as the current cap and, as such, it falls short of appropriately framing dark flow in the EU, as it only includes trades under the reference price and negotiated transactions waivers. We suggest to capture all trades without pre-trade transparency (except LIS blocks) under a single cap to limit dark trading. 2. The proposal to require SI public quotes to be up to twice the standard market size is not sufficient to truly increase transparency because these quotes are only accessible to a few customers, since SI enjoys discretionary access. To address this reality, we believe that limiting SI equity trading to above large in scale (LIS) only via Article 1(8) would be an efficient way to incentivise lit trading and ensure the quality and robustness of price formation. 3. To support strong markets that strengthen the price formation process, benefiting companies and investors, changes to the current market structure are essential. The creation of a consolidated tape (CT) in and of itself will not address these issues. Whilst the CT proposal makes some wise choices, such as defining a single post-trade CT per asset class covering all venues as well as the exclusion of ETDs from scope, it regrettably opts for the establishment of a real-time CT and leaves the door open to a pre-trade CT thus raising significant policy risks. 4. The possibility of a pre-trade CT is deeply concerning. A pre-trade CT would create a false sense of liquidity and would lead to the emergence of an European best bid and offer or de facto reference price, thereby creating an environment that is ripe for arbitrage at the expense of retail investors. 5. Introducing a real-time CT could deprive certain exchanges of an important revenue source seriously affecting exchanges’ continued ability to run and maintain a full suite of operations underpinning the CMU, such as the listing function and the nurture of SME growth markets, and ensuring the proper functioning of markets. This risk is not mitigated by the revenue-sharing model proposed as the scope and conditions of this model are unclear. Any revenue compensation model should be properly defined at Level 1 and should aim to ensure that market contributors are properly compensated for their contributions to the tape. 6. In light of the risks of a pre-trade tape and the need to ensure that exchanges are adequately compensated for their contribution to a CT, we propose to: - amend Recital 20 and Art. 1(10), 1(15), and 1(16) to establish a 15-minutes delayed post-trade CT - remove the reference to best bid and offer in the definition of core market data under Art. 1(2) thus altering the definition of core market data to cover only post-trade data. 7. A 15-minute delayed CT is the most pragmatic approach to delivering a tape meeting the goals of all investors, at the least disruption to the industry. This CT would draw on the current requirement to make available data free of charge 15-minute after publication and, consequently, remove entirely the complex issue of distribution models, particularly the question as to the scope of revenues that should receive compensation because there would be no need to redistribute revenue to its contributors. A delayed CT would provide easy and low-cost access to a consolidated view of the market without any undue impact on small venues. 8. We propose deleting Art. 1(7) mandating ESMA to translate the Level 3 RCB Guidelines to Level 2, as ESMA has just issue a report in this respect.
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Meeting with Nicolas Schmit (Commissioner) and

21 Mar 2022 · European Care Strategy and social dialogue for the social services sector.

Meeting with Tommy De Temmerman (Cabinet of Commissioner Mairead Mcguinness) and Banking Payments Federation Ireland and

11 Jan 2022 · Investment Firms prudential framework

Meeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis) and Banking Payments Federation Ireland and Futures Industry Association, Inc.

11 Jan 2022 · Investment Firms prudential framework

Meeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis)

16 Nov 2021 · Capital Markets Union; review of the Markets in Financial Instruments Regulation and Directive

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness)

25 Oct 2021 · MiFIR review

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Nathalie De Basaldua (Cabinet of Commissioner Mairead Mcguinness)

1 Oct 2021 · MiFIR Review and Consolidated Tape

Meeting with Nathalie De Basaldua (Cabinet of Commissioner Mairead Mcguinness)

17 Jun 2021 · Exchange on capital markets files and possible visit of Commissioner McGuinness to a stock exchange

Response to Data Act (including the review of the Directive 96/9/EC on the legal protection of databases)

15 Jun 2021

FESE supports the plan of the European Commission in proposing an overarching data strategy that has the potential to achieve the benefits of the single market. To this end, we believe a harmonised European approach is preferable to speed up the use/investment in technologies while effectiveness, fairness, proportionality, the international competitiveness of the EU market, and the safety of its people should be a guiding principle. We consider that regulators possess the appropriate tools to act effectively to prepare a harmonised approach. To avoid overregulation and/or ambiguity, special attention should be given as well to potential overlapping provisions. The Commission has produced an increasing number of initiatives in the data space. This non-exhaustive list includes: • European strategy for data o Data Governance Act (DGA) o Implementing act on high-value datasets o Data Act o Supervisory data collection strategy o Further open-finance initiatives • European Single Access Point • Consolidated Tape under MiFID II/R FESE is concerned that the scope of the various initiatives might overlap to a significant degree. For example, it is still unclear whether and to what extent the products and services provided by trading venues are covered by the DGA proposal, and what would be covered, instead, in the potential scope of the "Data Act”. Besides this, it is not clear how these proposals would relate in terms of sector-specific rules and regulations for the financial sector. Furthermore, we took note that the “Supervisory data collection strategy” aims at considering several horizontal measures that contribute to the overall objective of improving supervisory data collection (i.e. B2G relations). The “Data Act”, in a similar fashion, aims to ensure access and use of data for, inter alia, B2B and B2G situations. Hence, from our perspective, there is a clear overlap in scope. The same can be traced under the ESAP proposal and the Commission implementing act on high-value datasets. Both have the objective of defining/establishing a dataset for financial and non-financial data and company information, albeit in different formats. These separate initiatives are under the remit of different DGs in the Commission (DG FISMA and DG CNECT). The Commission should clarify and better define the scope of these initiatives. Legislative proposals should be designed to be proportionate to the existing business environment. From our perspective, these should not introduce new mandatory disclosure, access to data, or reporting requirements as there is a concrete risk of unnecessary duties duplication for both issuers and regulated markets. Furthermore, the possibility of gold-plating from Member States would exacerbate these risks. Against this background, we call for a holistic approach that supports the EU’s objective of enhancing the CMU for issuers and investors. An ill-designed data strategy will increase compliance cost for the financial sector, including trading venues and issuers, further fragmenting the virtual space where information/data is reported. This could create more barriers to investments. FESE wishes to underline the need to recognise the importance of supervisors’ understanding of supervised stakeholders and the markets where they operate. The right balance must be struck, within the European supervisory system, between a centralised European approach and the role of NCAs. For the same information, issuers and trading venues should report to one authority only, making it a simple and straightforward approach. FESE urges the Commission to perform a general assessment of both the current proposals being discussed as well as those to come in the future. All data-related initiatives should be analysed in a harmonised and holistic fashion, characterised by strong cooperation and communication between the different DGs. We stand ready to provide the Commission with further clarity on the information reported by regulated markets.
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Response to Supervisory data strategy

15 Jun 2021

FESE supports the plan of the European Commission in proposing an overarching data strategy that has the potential to achieve the benefits of the single market. To this end, we believe a harmonised European approach is preferable to speed up the use/investment in technologies while effectiveness, fairness, proportionality, the international competitiveness of the EU market, and the safety of its people should be a guiding principle. We consider that regulators possess the appropriate tools to act effectively to prepare a harmonised approach. To avoid overregulation and/or ambiguity, special attention should be given as well to potential overlapping provisions. The Commission has produced an increasing number of initiatives in the data space. This non-exhaustive list includes: • European strategy for data o Data Governance Act (DGA) o Implementing act on high-value datasets o Data Act o Supervisory data collection strategy o Further open-finance initiatives • European Single Access Point • Consolidated Tape under MiFID II/R FESE is concerned that the scope of the various initiatives might overlap to a significant degree. For example, it is still unclear whether and to what extent the products and services provided by trading venues are covered by the DGA proposal, and what would be covered, instead, in the potential scope of the "Data Act”. Besides this, it is not clear how these proposals would relate in terms of sector-specific rules and regulations for the financial sector. Furthermore, we took note that the “Supervisory data collection strategy” aims at considering several horizontal measures that contribute to the overall objective of improving supervisory data collection (i.e. B2G relations). The “Data Act”, in a similar fashion, aims to ensure access and use of data for, inter alia, B2B and B2G situations. Hence, from our perspective, there is a clear overlap in scope. The same can be traced under the ESAP proposal and the Commission implementing act on high-value datasets. Both have the objective of defining/establishing a dataset for financial and non-financial data and company information, albeit in different formats. These separate initiatives are under the remit of different DGs in the Commission (DG FISMA and DG CNECT). The Commission should clarify and better define the scope of these initiatives. Legislative proposals should be designed to be proportionate to the existing business environment. From our perspective, these should not introduce new mandatory disclosure, access to data, or reporting requirements as there is a concrete risk of unnecessary duties duplication for both issuers and regulated markets. Furthermore, the possibility of gold-plating from Member States would exacerbate these risks. Against this background, we call for a holistic approach that supports the EU’s objective of enhancing the CMU for issuers and investors. An ill-designed data strategy will increase compliance cost for the financial sector, including trading venues and issuers, further fragmenting the virtual space where information/data is reported. This could create more barriers to investments. FESE wishes to underline the need to recognise the importance of supervisors’ understanding of supervised stakeholders and the markets where they operate. The right balance must be struck, within the European supervisory system, between a centralised European approach and the role of NCAs. For the same information, issuers and trading venues should report to one authority only, making it a simple and straightforward approach. FESE urges the Commission to perform a general assessment of both the current proposals being discussed as well as those to come in the future. All data-related initiatives should be analysed in a harmonised and holistic fashion, characterised by strong cooperation and communication between the different DGs. We stand ready to provide the Commission with further clarity on the information reported by regulated markets.
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Meeting with Mairead McGuinness (Commissioner)

27 May 2021 · capital markets.

Meeting with Mairead McGuinness (Commissioner)

3 May 2021 · MiFID 11/MiFIR Review

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness)

11 Mar 2021 · MiFID II/Market Structure/consolidated tape

Meeting with Mairead McGuinness (Commissioner)

10 Dec 2020 · Capital Markets Union, Consolidated Tape, MiFID2/MiFIR Review

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness)

20 Oct 2020 · Capital Markets Union Action Plan, Consolidated tape

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

20 Oct 2020 · MiFID II/MiFIR and CMU

Response to Capital markets – research on small and mid-sized companies and fixed income (updated rules in light of the COVID-19 pandemic)

4 Sept 2020

FESE very much welcomes the proposed Delegated Act on SME Research. We share the Commission’s expectation that exempting small and mid-cap companies from the unbundling rule should result in an increase of research coverage for those companies. Moreover, we agree with the definition of small and mid-cap companies defined as those that do not exceed a market capitalisation threshold of EUR 1 billion over a 12 months period. Pre-MiFID II, research was supplied as part of a bundled service, paid by execution fees. Research post-MiFID II is required to be unbundled and priced separately from execution of trading of financial instruments. Following the MiFID II application, a growing number of SMEs are paying independent research providers to write research and take the initiative in approaching investors directly. Such a sponsored research can be useful and should be maintained provided potential conflict of interests are disclosed. We nonetheless recognise that this avenue may be limited by budget constraints. Some Exchanges have launched programs sponsoring and enhancing SME research. The first results are encouraging and suggest that it may create additional liquidity for listed SMEs. Given that the above mentioned research channels need to be complemented, FESE considers that authorising the bundling of SME research with other services is likely to increase production and distribution of research reports and may have a significant effect on the liquidity of SMEs. In addition, access to equity research on SMEs could be further improved by: • Launching a Pan-European program to cover the costs of research coverage. • Establish user-friendly platforms for analysts to share their reports on.
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Meeting with Valeria Miceli (Cabinet of President Ursula von der Leyen)

19 Jun 2020 · Upcoming MIFID/MIFIR quick fixes and open access

Response to Minimum standards for benchmarks labelled as EU Climate Transition and EU Paris-aligned Benchmarks

6 May 2020

FESE has concerns that some of the proposed elements in the draft Delegated Acts are not defined. For instance: it is unclear how a ‘base year’ is defined. Without guidance, the risk of divergent application is apparent which would be contrary to the goal of promoting transparency and comparability for investors. The same applies to the term ‘tobacco’ which should be defined for consistency. In the absence of a definition, we understand that the factor ‘involvement in activities related to tobacco’ is met by excluding companies with tobacco production at > 0% revenue threshold.
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Response to References to ESG factors enabling market participants to make well-informed choices

6 May 2020

There is a need to clarify the draft Delegated Act’s (DA’s) annexes regarding if administrators need to report on all items listed or just those deemed relevant. The ESG disclosure obligation can be interpreted as an obligation: i) to report the KPIs on the Annex II factors; ii) to report on selected relevant ESG factors, i.e. not all of Annex II. Our understanding is that administrators have to report relevant ESG factors. It should be clarified that the ESG factors in Annex II are considered as “additional ESG factors and related information” and flexibility should be given to report relevant ESG factors for each benchmark. Otherwise, it would be unclear how to calculate disclosure obligations, notably when the factors have no links with the benchmark’s underlying. Annex I: Section 1, item 4 should be clarified for benchmarks that do not pursue ESG objectives so that where the answer to “Does the benchmark pursue ESG objectives?” is “No”, the administrator is not obliged to display the entire table on climate-related disclosures but only item 4 and 5. Item 1 – 3 will be part of any benchmark statement. Regarding Section 1, Item 7 b) it is unclear what reference standards to disclose. If this refers to item 6 it would not seem necessary to re-disclose these.In Section 3, Item 9 it should be set out that an administrator may state that a benchmark is not aligned with the target of reducing carbon emissions or the attainment of the objectives of the Paris Agreement. In this case, no further information on the degree of alignment with reducing carbon emissions would need to be disclosed. Annex II: According to the TEG report, the coverage for each ESG factor should be disclosed. As the draft DAs do not mention this, administrators would not report coverage. Weighting changes – depending on methodology – can be caused by price fluctuations. Constituents of an index can change, e. g. due to corporate actions. To ensure disclosures are meaningful, changes of weightings and constituents should be considered. However, administrators should only have to publish such data quarterly. Environmental Classification of economic activities according to NACE: This may be difficult to implement as administrators do not use NACE. NACE is more granular than industry classification used as it looks at economic activities, while sector classification only categorises entities. It is unclear how to obtain such data without significant costs/efforts. Percentage of GHG emissions reported versus estimated: We understand this to mean a comparison of the constituents of a benchmark) which provide reported numbers vs. the percentage of entities (as constituents of a benchmark) which provide only estimated numbers. Alternatively, the requirement could refer to a comparison of the ex-ante estimated values of all constituents of an index versus the ex-post actual emissions. Exposure to environmental goods and services sector: Administrators usually do not produce data needed to calculate indices on their own. Rather, they obtain data from data vendors. Currently, data on the Exposure of the benchmark portfolio to activities included in the environmental goods and services sector cannot be obtained from vendors on activities-level as such exposure can currently only be determined on entity/constituent level. According to preliminary feedback, the draft requirement is vague from the perspective of data providers. It may be that such data products will be overly expensive and of limited value for investors. Exposure of the benchmark portfolio to renewable energy: There is no definition of ‘renewable energy sector’ and administrators will have to define this term. Social Controversial weapons: Administrators are to choose which definition to rely on for the term ‘controversial weapon’. This might be better placed in Annex I, item 7, ‘data and standards used’ where administrators disclose the supporting standards used.
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Response to Review of the Benchmark Regulation

15 Apr 2020

The Benchmarks Regulation (BMR) applies to all benchmarks regardless of the underlying market. However, we believe different types of benchmarks pose different types of risks to the markets. From a global perspective – where many developments have taken place – IOSCO has recognised that benchmarks based on regulated data could be subject to a proportionate approach. The Benchmarks Regulation acknowledged that regulated data benchmarks are less prone to manipulation. Nevertheless, experience with its application has shown that the framework does not differ much from that of other types of benchmarks. Moreover, the definition of regulated data benchmarks could benefit from clarification related to third-country regulated data. Among the various other topics raised in the context of the BMR Review, we would like to highlight some key areas as follows: Critical benchmarks FESE does not consider that competent authorities should have broader powers regarding methodology modifications for critical benchmarks. On the contrary, we consider that this could create uncertainty for users regarding the continued provision of such benchmarks. Non-significant benchmarks We believe that much of the governance and control requirements would not have to be applied to non-significant benchmarks, especially in cases where there are very little assets under management. Climate-related benchmarks We strongly support the initiatives to incentivise sustainable investments and enabling the financial community to market these products in a comparable transparent fashion. However, we would caution against an approach that would introduce a control framework that could end up disincentivising sustainable investments considering that we are still in the early stages of moving capital towards a sustainable goal. Commodity benchmarks There is currently a lack of clarity between provisions for regulated data benchmarks and commodity benchmarks and how these overlap for benchmarks that fit into both frameworks. FESE would, therefore, see benefits in clarifying the applicable provisions. The provisions of Article 2 (2)(g) and Annex II seem overly restrictive and disproportionate for small commodity benchmarks. FX forwards FESE would support sensible legislation which allows the use of FX spot rates for not fully convertible currencies as reference rates for non-deliverable forward contracts. Third country regime We appreciate the different methods for how third country benchmark providers could bring their benchmarks into the EU. However, reality shows that equivalence is not a real option and the recognition process sets up large hurdles due to the need for an establishment of a legal presence in the EU. The endorsement process would benefit if the requirements could be described and defined in more details in BMR or via an RTS.
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

15 Apr 2020 · CMU and MiFID II/MiFIR

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

20 Feb 2020 · Equity market structure,Market data and ETDs

Meeting with Andrea Beltramello (Cabinet of Vice-President Valdis Dombrovskis)

29 Oct 2019 · CMU

Meeting with Andrea Beltramello (Cabinet of Vice-President Valdis Dombrovskis)

26 Apr 2019 · MiFID II

Meeting with Paulina Dejmek Hack (Cabinet of President Jean-Claude Juncker) and European Federation of Investors and Financial Services Users

5 Dec 2018 · Speech at the International Conference "EU Capital Markets 2024"

Meeting with Olivier Guersent (Director-General Financial Stability, Financial Services and Capital Markets Union)

5 Dec 2018 · CMU, Mifid

Response to Institutional investors' and asset managers' duties regarding sustainability

22 Aug 2018

FESE members organise markets dedicated to sustainable finance and offer products that contribute to sustainable development, facilitate management of climate risk and incorporate carbon reduction in investment strategies, as well as allow the tracking of sustainable companies’ performance. Moreover, FESE members actively engage in the UN Sustainable Stock Exchanges initiative to promote sustainable capital markets. FESE welcomes and supports the commitment by the European Commission’s as part of the Action Plan on Financing Sustainable Growth to find collective solutions to the urgent threat posed by climate change and considers that initiatives on sustainable finance can complement regulatory actions taken to fight climate change. A transparent and consistent approach in line with ESG-aspects by the real economy, financial industry and regulators holds great opportunities for the international capital markets, both in the area of risk assessment and for the identification of new business areas. FESE supports the creation of a taxonomy as this would favour both comparability and transparency. We also welcome the proposal to define sustainable activities, rather than basing the assessment on types of companies or assets, as this will enable distinguishing between various activities carried out by companies and does not favour any asset class over another. Activities should include planned activities and respective achievements linked to those planned activities. FESE supports the intention to establish the taxonomy by involving experts at an early stage, first through the expert group, and at a later stage through a dedicated platform. In addition, basing the technical screening criteria on conclusive scientific evidence should ensure that the EU taxonomy is defined by streamlining and enhancing existing international frameworks (including the Global Reporting Initiative, the UN Global Compact and the TCFD-recommendations), as well as national frameworks and that the creation of a new parallel taxonomy is avoided. The intention to make the taxonomy proportionate to the scale of the economic activity is also very welcome. FESE considers that a clearly defined taxonomy, whereby agreement on what constitutes environmentally sustainable assets and activities (existing, planned and achieved ones) is found, is a necessary starting point for other actions. For instance, ensuring availability of high quality, consistent and comparable data is a prerequisite for the creation of meaningful sustainability standards and labels. While the Commission’s legislative proposal is at first aiming to focus on establishing a unified classification system related to climate change, there is also an important need for classification of environmentally and socially sustainable activities. We therefore consider that it is important to align the timeframe and calendar of the various taxonomy workstreams. As a result, the process of embedding the taxonomy into EU law would be smoothened. FESE welcomes the technical orientation of working groups yet also considers that the process to establish a taxonomy should not be expedited and should integrate expert dialogues at the level of the member states. For a detailed description of FESE’s position on the Action Plan and the proposed legislative measures most relevant to exchanges, please see our position on sustainable finance included in attachment.
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Response to Institutional investors' and asset managers' duties regarding sustainability

22 Aug 2018

FESE members organise markets dedicated to sustainable finance and offer products that contribute to sustainable development, facilitate management of climate risk and incorporate carbon reduction in investment strategies, as well as allow the tracking of sustainable companies’ performance. Moreover, FESE members actively engage in the UN Sustainable Stock Exchanges initiative to promote sustainable capital markets. FESE welcomes and supports the commitment by the European Commission’s as part of the Action Plan on Financing Sustainable Growth to find collective solutions to the urgent threat posed by climate change and considers that initiatives on sustainable finance can complement regulatory actions taken to fight climate change. A transparent and consistent approach in line with ESG-aspects by the real economy, financial industry and regulators holds great opportunities for the international capital markets, both in the area of risk assessment and for the identification of new business areas. FESE members are index providers that in many cases provide green, sustainable and social benchmarks. FESE therefore welcomes the opportunity to present its views on the Commission’s proposal to amend the Benchmarks Regulation and define ‘low carbon’ and ‘positive carbon impact’ benchmarks. While FESE fully supports the objectives of the original Benchmarks Regulation to ensure the accuracy, robustness and integrity of benchmarks and of the benchmark determination process, we have serious concerns regarding how the definition of regulated data benchmark has been interpreted since the conclusion of Level 1. FESE has repeatedly stated the need to clarify these provisions to ensure that regulated data benchmarks will be able to benefit from the category the co-legislator designed for them. We were therefore surprised when the Commission presented its proposal to create two new categories of benchmarks, without taking the opportunity to also address the issue regarding the definition of regulated data benchmark. For further technical details, please see attachment. Regarding the Commission’s legislative proposal, FESE supports its intention, since, while there is currently a spectrum of low carbon benchmarks available to the market, consistently applied, clear definitions would be welcome. However, FESE considers that the proposal, in its current form, lacks clarity, which would facilitate evasion. FESE considers that it is the investor that should set exclusion criteria. However, should criteria nonetheless be defined in legislation, it should be decided at a political level since this would not be a technical assessment. Moreover, this process should be open to input from a broad range of stakeholders and regulators. As regards the definition of ‘positive carbon impact benchmarks’, FESE deems it necessary that both companies’ planned activities and achievements on planned activities are taken into consideration when selecting the benchmark constituents. Regarding methodology requirements, FESE considers that disclosure requirements for the methodology should be further streamlined to achieve the objectives the Commission is targeting, while respecting the confidential nature of some aspects of the methodology. Regarding the criteria and method for the weighing of the underlying assets of a benchmark, FESE stresses that it is important to take into account the fact that in the weighing of underlying assets basic weighing factors as diversification and risk limits can be mutually exclusive with ESG considerations. Furthermore, it should be noted that, any data index administrators obtain, is usually only licensed for the provision and calculation of their indices. Therefore, such data may not be shared with others without the initial explicit consent of the data provider. For our detailed views on the proposal, please see the section on benchmarks in the attached FESE position on sustainable finance.
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Response to Proposal for a Directive amending Directive 2014/65/EU (MiFID2)

9 May 2018

FESE fully supports the Commission’s objective of increasing the harmonisation of crowdfunding activity and reviewing potential barriers to cross-border transactions, both initiatives which could help to bolster an important source of capital for early-stage companies. Following the funding escalator rationale, companies need access to different types of funding at different stages of their development; e.g. crowdfunding, business angels, venture capital, private placement, IPO on Growth & Main Markets as well as secondary capital raisings. Crowdfunding can be a positive element for enterprise funding in general and for reviving public corporate financing. Although the contribution of crowdfunding platforms to total equity financing is still relatively small and concentrated in certain EU Member States, volumes are growing rapidly. FESE Members support the Commission’s intent to create pan-European standards which would ensure the proper functioning and growth of these platforms in a safe manner whilst providing a new means of source of financing for companies. This will also promote cross-border activity and safeguard investors’ interests. Notwithstanding these benefits, crowdfunding is not a substitute for IPOs. Public markets offer an easy access to companies wanting to raise capital and to all investors, retail and institutional, wishing to diversify their portfolios. However, in terms of scale, even if crowdfunding continues to grow at a very high speed, the amount of funds that can be raised individually and collectively through crowdfunding cannot be expected to meet the financing gap faced by European enterprises over the coming decades. The capital pooled by crowdfunding platforms remains limited when compared to the capital raised on public markets. In particular, the companies that have the biggest impact on job growth are those at the high end of the funding escalator scale, which means that, even if crowdfunding growth trends continue, this may have only a modest impact on new jobs created in Europe. Furthermore, the visibility ensured by raising capital via crowdfunding is still quite limited and this reflects on the ability of companies to then be able to recruit high profile employees. To fully meet the needs of European companies, with a focus on those that have the highest contribution to job growth, the EU needs to continue working on a comprehensive strategy on how to boost equity financing at all stages of the funding escalator. FESE members support the development of a well-calibrated European framework for crowdfunding that is consistent with the principles of EU regulation of financial markets. In our view, the EU legislative framework governing capital raising is generally appropriate. These laws have clear objectives, with which we agree, and were conceived with a focus on the objectives of investor protection, transparency, market integrity, open competition with a level playing field, and proper regulatory oversight.Should crowdfunding be allowed to operate with vastly different levels of regulation across the EU, there is risk of the Single Market being undermined. We therefore welcome the Commission’s proposal to introduce a common threshold for each crowdfunding transaction at 1 000 000 EUR. We believe that this threshold is in line with the principles that guided the recent review of the EU Prospectus Framework and the overall work of the European Commission to facilitate smaller companies’ access to alternative source of financing. Furthermore, we believe that a 1 000 000 EUR threshold is consistent with the proposal to exempt crowdfunding platforms from the application of other sectorial legislation, i.e. MiFID/R II trading rules. However, should this threshold be increased during the negotiations, we would call on policymakers to apply the full range of EU trading and listing rules to crowdfunding in order to maintain the principle of an equal level playing field. Attached full response.
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Response to Legislative proposal for an EU framework on crowd and peer to peer finance

9 May 2018

FESE fully supports the Commission’s objective of increasing the harmonisation of crowdfunding activity and reviewing potential barriers to cross-border transactions, both initiatives which could help to bolster an important source of capital for early-stage companies. Following the funding escalator rationale, companies need access to different types of funding at different stages of their development; e.g. crowdfunding, business angels, venture capital, private placement, IPO on Growth & Main Markets as well as secondary capital raisings. Crowdfunding can be a positive element for enterprise funding in general and for reviving public corporate financing. Although the contribution of crowdfunding platforms to total equity financing is still relatively small and concentrated in certain EU Member States, volumes are growing rapidly. FESE Members support the Commission’s intent to create pan-European standards which would ensure the proper functioning and growth of these platforms in a safe manner whilst providing a new means of source of financing for companies. This will also promote cross-border activity and safeguard investors’ interests. Notwithstanding these benefits, crowdfunding is not a substitute for IPOs. Public markets offer an easy access to companies wanting to raise capital and to all investors, retail and institutional, wishing to diversify their portfolios. However, in terms of scale, even if crowdfunding continues to grow at a very high speed, the amount of funds that can be raised individually and collectively through crowdfunding cannot be expected to meet the financing gap faced by European enterprises over the coming decades. The capital pooled by crowdfunding platforms remains limited when compared to the capital raised on public markets. In particular, the companies that have the biggest impact on job growth are those at the high end of the funding escalator scale, which means that, even if crowdfunding growth trends continue, this may have only a modest impact on new jobs created in Europe. Furthermore, the visibility ensured by raising capital via crowdfunding is still quite limited and this reflects on the ability of companies to then be able to recruit high profile employees. To fully meet the needs of European companies, with a focus on those that have the highest contribution to job growth, the EU needs to continue working on a comprehensive strategy on how to boost equity financing at all stages of the funding escalator. FESE members support the development of a well-calibrated European framework for crowdfunding that is consistent with the principles of EU regulation of financial markets. In our view, the EU legislative framework governing capital raising is generally appropriate. These laws have clear objectives, with which we agree, and were conceived with a focus on the objectives of investor protection, transparency, market integrity, open competition with a level playing field, and proper regulatory oversight.Should crowdfunding be allowed to operate with vastly different levels of regulation across the EU, there is risk of the Single Market being undermined. We therefore welcome the Commission’s proposal to introduce a common threshold for each crowdfunding transaction at 1 000 000 EUR. We believe that this threshold is in line with the principles that guided the recent review of the EU Prospectus Framework and the overall work of the European Commission to facilitate smaller companies’ access to alternative source of financing. Furthermore, we believe that a 1 000 000 EUR threshold is consistent with the proposal to exempt crowdfunding platforms from the application of other sectorial legislation, i.e. MiFID/R II trading rules. However, should this threshold be increased during the negotiations, we would call on policymakers to apply the full range of EU trading and listing rules to crowdfunding in order to maintain the principle of an equal level playing field. Attached full response.
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Response to Review of the appropriate prudential treatment for investment firms

8 Mar 2018

The Federation of European Securities Exchanges (FESE) welcomes the underlying objective followed in the Commission’s legislative proposals on designing a new prudential regime for investment firms, i.e. to categorise investment firms into three classes based on the risks they pose and to attach different capital and prudential requirements to the respective classes. We consider that this class-based approach provides a reasonable starting point to harmonize prudential requirements within and between single classes. Based on this categorisation scheme, it is important that capital requirements are calibrated in a way which pays particular attention to the principles of prudence and proportionality in order to avoid any disruptive effects during the transitional phase from the old to the new regime and beyond. FESE has strong concerns regarding the potential impact of the proposals on market makers and liquidity providers, as they do not appropriately accommodate risks associated with investment firms’ business activities; in particular, they do not fully recognise that investment firms may positively contribute to market liquidity and transparency. In effect, this may result in wrongly calibrated capital requirements which may – by the very design and calibration of the calculation method – disincentivise respective investment firms from providing liquidity. Furthermore, it should be kept in mind that the proposals are clearly linked to other regulatory dossiers and political projects, such as the Capital Markets Union, MiFID II and EMIR. Should the legislation be adopted in the current form, it would result in a large overstatement of risks and disproportionate capital requirements for market makers. As a result, market quality and resilience will be adversely affected by possibly forcing a large group of market makers to retreat from the markets. This would disturb the price discovery process and result in decreased and less diverse liquidity and transparency, increased volatility, reduced competition in the market, and eventually increased systemic risk as trading will be concentrated only in a small number of large firms. Consequently, other market participants may face funding and hedging difficulties resulting in a further aggravation of a stressed market situation, which may spread to the wider economy very swiftly. In short, the proposed approach would thus have adverse implications on the stability, resilience, security and effective functioning of EU financial markets. We, therefore, urge the Commission and the co-legislators to consider amendments that should appropriately reflect the limited risk market makers pose to the market, and the benefits they provide, especially in cleared derivatives markets. They should also be consistent with provisions and obligations established under other EU legislation (in particular MiFID II and EMIR), and with the objectives of the CMU project. Finally, we see some value in analysing in more depth (and beyond the sheer consideration of liquidity in itself) what effect the proposals may have on the diversity and heterogeneity of liquidity providing investment firms. We consider it essential for the effective transfer of risks among interconnected markets that there are investment firms with diverging investment horizons, trading strategies, portfolio management or risk appetite – to name just a few factors which critically and directly are subject to prudential requirements. In addition, we ask the co-legislators to apply proportionality when assessing the potential implications of a lack of international consistency with other major jurisdictions. The new prudential regime for Investment Firms should not disincentivise market makers from third countries to reduce or even cease their liquidity provision activities on European exchanges nor discriminate EU firms in global competition. Please also find attached our detailed position on the proposals.
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Response to Review of the appropriate prudential treatment for investment firms

8 Mar 2018

The Federation of European Securities Exchanges (FESE) welcomes the underlying objective followed in the Commission’s legislative proposals on designing a new prudential regime for investment firms, i.e. to categorise investment firms into three classes based on the risks they pose and to attach different capital and prudential requirements to the respective classes. We consider that this class-based approach provides a reasonable starting point to harmonize prudential requirements within and between single classes. Based on this categorisation scheme, it is important that capital requirements are calibrated in a way which pays particular attention to the principles of prudence and proportionality in order to avoid any disruptive effects during the transitional phase from the old to the new regime and beyond. FESE has strong concerns regarding the potential impact of the proposals on market makers and liquidity providers, as they do not appropriately accommodate risks associated with investment firms’ business activities; in particular, they do not fully recognise that investment firms may positively contribute to market liquidity and transparency. In effect, this may result in wrongly calibrated capital requirements which may – by the very design and calibration of the calculation method – disincentivise respective investment firms from providing liquidity. Furthermore, it should be kept in mind that the proposals are clearly linked to other regulatory dossiers and political projects, such as the Capital Markets Union, MiFID II and EMIR. Should the legislation be adopted in the current form, it would result in a large overstatement of risks and disproportionate capital requirements for market makers. As a result, market quality and resilience will be adversely affected by possibly forcing a large group of market makers to retreat from the markets. This would disturb the price discovery process and result in decreased and less diverse liquidity and transparency, increased volatility, reduced competition in the market, and eventually increased systemic risk as trading will be concentrated only in a small number of large firms. Consequently, other market participants may face funding and hedging difficulties resulting in a further aggravation of a stressed market situation, which may spread to the wider economy very swiftly. In short, the proposed approach would thus have adverse implications on the stability, resilience, security and effective functioning of EU financial markets. We, therefore, urge the Commission and the co-legislators to consider amendments that should appropriately reflect the limited risk market makers pose to the market, and the benefits they provide, especially in cleared derivatives markets. They should also be consistent with provisions and obligations established under other EU legislation (in particular MiFID II and EMIR), and with the objectives of the CMU project. Finally, we see some value in analysing in more depth (and beyond the sheer consideration of liquidity in itself) what effect the proposals may have on the diversity and heterogeneity of liquidity providing investment firms. We consider it essential for the effective transfer of risks among interconnected markets that there are investment firms with diverging investment horizons, trading strategies, portfolio management or risk appetite – to name just a few factors which critically and directly are subject to prudential requirements. In addition, we ask the co-legislators to apply proportionality when assessing the potential implications of a lack of international consistency with other major jurisdictions. The new prudential regime for Investment Firms should not disincentivise market makers from third countries to reduce or even cease their liquidity provision activities on European exchanges nor discriminate EU firms in global competition. Please also find attached our detailed position on the proposals.
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Meeting with Zacharias Giakoumis (Cabinet of Commissioner Christos Stylianides)

30 Jan 2018 · exchange of views on new regulation and policies

Response to Review of the European Supervisory Authorities

23 Jan 2018

FESE welcomes the opportunity to provide its views on the Review of the European Supervisory Authorities and FESE believes the focus should be on the following high-level principles and objectives: 1. Strengthening supervisory convergence should be achieved within ESMA’s current tools and structures: FESE has a positive view of the overall workings of ESMA, therefore, we are not in favour of radical changes to ESMA’s role. It is important to ensure that ESMA can continue to fulfil its current function properly and strengthen its role. While FESE believes that ESMA already has the correct range of tools to be able to deliver supervisory convergence, we broadly support the package of measures to strengthen supervisory convergence. The adoption of the proposals for reform of supervisory convergence would allow ESMA to reinforce the EU’s Single Market and contribute to the delivery of the Capital Markets Union, while utilising NCA knowledge. 2. FESE does not support extending direct supervision by ESMA for Prospectus Approval, Data Publication Services and Benchmark Administrators: ESMA should not take a direct supervisory role in areas where NCAs perform these roles effectively, as this has not been sufficiently justified by the Commission’s impact assessment. Before any consideration of transferring these tasks to ESMA, it must be demonstrated that supervisory coordination via ESMA, supervisory colleges and supervisory convergence (both current and strengthened measures) across the NCAs has not achieved its objectives. The focus should be on strengthening ESMA’s role in supervising and co-ordinating supervision to ensure there is a level playing field across the EU. -Prospectus Approval: NCAs have already developed the experience and expertise to review the prospectuses which are within the remit of the proposal and local ecosystems have evolved around these markets; this efficient and effective approach cannot be easily replicated. -Data Publication Services: Direct ESMA supervision in this area would lead to a fragmentation of supervision. While ESMA would be responsible for the authorisation and supervision of APAs, ARMs and CTPs, NCAs would retain responsibility for the authorisation and ongoing supervision of the rest of trading venues’ businesses. -Benchmark Administrators: The proposed transfer of supervisory powers to ESMA appears premature and not in line with the subsidiarity principle. 3. NCAs are necessary for further development of European capital markets: There is a need to recognise the importance of NCAs understanding of the stakeholders under supervision and the markets they operate in. NCAs are necessary for further development of European capital markets due to their wealth of experience supervising their local markets and adapting the regulatory environment to best suit the local ecosystem. Enforcing supervisory convergence should mean ensuring that legislation is implemented as intended by the legislator to establish a level playing field, while importantly identifying and recognising any situations in which there may be more than one way to achieve these objectives. 4. Third Country issues and Europe’s role in Global Markets need to be part of ESMA’s mandate: FESE supports measures to strengthen oversight over third country market participants, via: (i) an extension of ESMA’s powers to monitor on an ongoing basis regulatory and supervisory developments in third countries deemed as equivalent, (ii) an ESMA monitoring role when it comes to effective supervision by NCAs of outsourcing or delegating activities outside the EU to resolve forum shopping concerns. The international dimension, should always be considered to ensure that EU guidelines do not significantly differ from international standards. There is a need to recognise that capital flows are global and that the European market should fit into a globally competitive model. Providing a vision for Europe on a global stage is key.
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Response to Calculation of total values of references to benchmarks

20 Jul 2017

Best effort basis to apply for all threshold calculations Thresholds provide for a key criterion for the categorisation of benchmarks. Therefore, FESE members fully agree with the EU Commission that such thresholds shall be calculated in the same manner across the EU. FESE deems this beneficial for a level playing field and a competitive environment within the EU. We appreciate the additional clarification provided by the Commission but would like to reiterate that the calculation of thresholds under the BMR should all be done on a best effort basis, regardless of the data sources tapped. The current Draft Delegated Act only foresees calculation of thresholds under Article 4 “Use of alternative amounts and values” to take place on a best effort basis, but does not provide for this treatment for calculations according to Art 1-3. We do not deem this to be appropriate as the calculation of thresholds is challenging even in cases where mandatory data sources have been identified by the regulator. Threshold calculation remains complex – access to data fragmented Within the Delegated Act, the Commission refers to several mandatory data sources for the calculation of thresholds. Data generated through MiFID II, EMIR, UCITS and AIFMD shall be mandatorily accessed and used by Benchmark Administrators. It is our understanding that such data sources are only provided in a fragmented way which would increase cost and complexity to identify and access the data in a timely manner. In more detail:  FESE does not foresee any significant difficulties regarding data referred to in Article 1. We assume that we will have access to such data in a structured and machine-readable way.  The same assumptions as for Article 1 apply for data provided by trade repositories as outlined in Article 2, but we are aware that data will be fragmented in the latter case.  However, we are concerned regarding data referred to in Article 3 under UCITS and AIFMD since it is currently our understanding that all or many of the data sources promoted by the Commission within Article 3 are neither provided in a consolidated format, nor in a machine-readable way, at least not to the public. Therefore, it is currently unclear if all data can be identified under the current Draft DA without becoming disproportionate. Also, it is unclear how all necessary information shall be identified in the first place. We therefore would deem it appropriate to research only on those UCITs and AIFMs with which the administrator holds contracts. A general screening of the market would be disproportionate in those cases. With the current understanding of market structures and information available, it seems to us that the necessary efforts for the identification of relevant data sources and the extraction of respective information from such data sources will be very extensive, costly and complex for Benchmark Administrators. Even more so in case of Benchmark Administrators who administer several thousands of indices. Due to fragmentation and the complex information identification expected in this respect (including the expectation that only non-machine-readable data will be available to Benchmark Administrators under Article 3) threshold data in general (Articles 1-4) shall be generated on a best effort basis. FESE would strongly appreciate a clarification to this effect within the Delegated Act. Moreover, FESE would support excluding actively managed UCITS from the threshold calculation. Actively managed UCITS use a benchmark to determine an over- or underperformance of their fund, and therefore the final performance of such an investment is not directly or not to 100% related to the benchmark. Endorsement FESE also recognises that the expected Delegated Act on ‘Endorsement’ has so far not been published. FESE would urge the Commission to publish the Delegated Act as soon as possible to provide certainty for market participants.
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Response to Commission Delegated Regulation amending the MiFID 2 Delegated Regulation with respect to systematic internaliser defint

18 Jul 2017

FESE supports the spirit of MiFID II to promote transparency, move trading from OTC markets to regulated trading venues, and firmly differentiate between bilateral and multilateral trading activity to safeguard the price formation process on transparent regulated venues and deliver a level playing field. The objectives of MiFiD II are severely threatened by three major loopholes giving an unfair and unjustified advantage to trading on SIs. Should these loopholes not be addressed, there is a high risk the unintended consequence of MiFID II will be a fundamental change of market structure away from public, transparent, and multilateral markets to private, opaque, and bilateral liquidity pools. FESE’s view is that, under MiFID II, all trading activity should be re-organised either as Regulated Markets or MTFs (or OTFs for non-equities) for multilateral trading or as SIs for purely bilateral trading. It is critical a clear differentiation is made and maintained between bilateral and multilateral trading activity. FESE strongly supports the proposed draft Commission Delegated Regulation which should close one of the loopholes. We believe the proposed Article 16a deals both with the ‘internal’ riskless trading (on a single SI) and the ‘external’ riskless trading (across multiple SIs), regardless of whether such activity is pre-arranged via interconnected networks or more informal, e.g. via ‘pinging’. At the same time, genuine activity such as portfolio trades or swaps/CFD trades, will not be captured by the proposed changes. We believe the proposal will close this loophole regarding the SI regime, will distinguish between bilateral and multilateral trading, and ensure market developments in this space are aligned with the original intent and spirit of the legislation. However, we would like to draw the Commission’s attention to two remaining loopholes in respect of the SI regime: tick sizes and post-trade transparency. The capacity of SIs to improve prices without respecting tick sizes means they will be able to offer (often meaningless) price improvement to their clients. In conjunction with best execution requirements, this means SIs are extremely likely to capture significant trading flows in the post-MIFID II market structure. This unlevel playing field is not justifiable; SIs should be subject to the same obligations as trading venues in this respect. Moreover, control over the timing of trade publication on SIs (up to 1min) will give firms operating SIs a considerable advantage over market makers on public markets. If these loopholes are left unchecked, we fear the following impact on: •Price formation: migration of trading towards a less transparent environment as SIs are only transparent up to standard market size (SMS, €7500 for most equities). In addition, price improvement on SIs means they retain the ability to trade at midpoint (just like under the reference price waiver) in sizes as low as €7500 without being affected by the double volume caps; •Market makers: because of the control they retain on the timing of post-trade transparency, market makers acting as SIs will have inherent advantages over market makers on public markets. This gives market makers incentives to set up as SIs instead of providing liquidity on public markets, with potentially significant consequences on overall liquidity and market quality; •Fairness of markets and investor protection: SIs are private pools of liquidity where market makers have the ability to choose who they are trading with and adapt their prices depending on the type of client; •Market data complexity: to ensure best execution for their clients, brokers will need to set up connectivity to SIs with considerable impact on operating costs and complexity; •Overall higher levels of risk in the market: SI transactions in equities will likely not be subject to central clearing. Please also find attached further proposals on the SI regime.
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Meeting with Olivier Guersent (Director-General Financial Stability, Financial Services and Capital Markets Union)

31 May 2017 · CMU, MIFID2, European Regularoty Framework

Meeting with Valdis Dombrovskis (Vice-President) and

20 Sept 2016 · CMU initiative

Meeting with Paulina Dejmek Hack (Cabinet of President Jean-Claude Juncker)

7 Jun 2016 · Capital Markets Union

Meeting with Lee Foulger (Cabinet of Vice-President Valdis Dombrovskis)

3 Jul 2015 · Markets in Financial Instruments Directive II

Meeting with Jonathan Hill (Commissioner)

2 Dec 2014 · Capital Markets Union