We note today’s statement by the E6 group calling for increased transparency in equity markets and measures aimed at establishing what it describes as a “level playing field” between banks and trading venues. While we support the objective of promoting strong, efficient and globally competitive European capital markets, we are concerned that several of the proposals risk impairing banks’ ability to provide additional liquidity in EU equity markets and deliver improved outcomes for investors.
Banks are not exchanges, and it is critical that policymakers appreciate this distinction when considering whether there is a regulatory playing field that needs to be levelled. Unlike exchanges, which match buying and selling interests, banks commit their own capital by taking the other side of a trade, providing investors with immediacy of execution, certainty of execution, and reduced market impact. The liquidity they provide is therefore additive and complementary to that offered by exchanges—it does not detract from it.
A successful capital market should not be assessed solely on the basis of market share in trade execution. On the contrary, a diversity of trading mechanisms supports the overall competitiveness, efficiency, and attractiveness of capital markets. This diversity is also present across other major global jurisdictions and is actively supported by investors because it provides them with value and flexibility in execution.
Any regulatory reforms should be evidence-based and subject to robust impact assessment to avoid inadvertently reducing the willingness or ability of banks to commit capital in support of client activity, as this would be to the detriment of investors.
We therefore urge policymakers to focus on the core objectives of the MISP: fostering genuine pan-European market integration rather than protecting national market infrastructures; simplifying regulation rather than introducing complex and unnecessary rule changes; and enhancing the global competitiveness of EU equity markets by preserving investors’ access to a diverse range of trading mechanisms.
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