AFME calls for data-led approach on market structure policymaking | AFME

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AFME calls for data-led approach on market structure policymaking
18 Sep 2020
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AFME is calling on policy makers to use independent data to support their review of equities markets structure with a view of promoting competitive, diverse, well-regulated and innovative European capital markets which are more efficient to attract further investment. The pan-European trade association is launching a data-driven initiative today (18th September) to highlight the threat of inaccurate information and market data, and promote a fact-based approach to policymaking.

The initiative is launched with a video highlighting the importance of a diverse equities market structure for the benefit of investors and issuers, and follows the publication of an AFME analysis of the liquidity landscape in Europe, produced using data provided done by independent analytics firm Big XYT that revealed

 

  • For the first six months of 2020, 81% of addressable liquidity was executed on-venue, 13% on systematic internalisers and 6% over the counter (OTC). 
     
  • The share between these trading mechanisms remained stable after the application of MIFID II, with the quality of price formation remaining strong. Functions served by different trading mechanisms are not  always interchangeable. In particular, trading done in exchanges is not interchangeable with the service provided by systematic internalisers, which play a critical role in the provision of liquidity for pension and investment funds.

 

April Day, Head of Equities at AFME, said:

“A diverse and well-regulated capital market, with a range of trading mechanisms and not reliant upon one category of trading venue, better supports the needs of investors and their customers. By promoting competition, a diverse trading landscape lowers costs and promotes the growth of well-regulated capital markets, ultimately benefiting consumers’ pensions and savings.

 

“We believe financial markets policy should prioritise the needs of end users, as the ultimate beneficiaries of capital markets, in maintaining orderly and well-functioning markets. We are launching this campaign to dispel myths on the current share of liquidity between different types of trading mechanism and promote a data-driven approach to policy making.   Further competition and well-regulated innovation supports the goals of the Commission’s Capital Markets Union initiative. 

 

“We hope that this initiative will be helpful to policymakers and regulators and anyone interested in understanding the true nature of equities market structure. Transparent, reliable data should be a priority in informing changes to legislation and ensuring the principles of MiFID stand strong.”

 

The video can be found here

 

Read more about AFME’s data-driven approach here

– Ends –

 

AFME Contacts

Patricia Gondim

Interim Head of Media Relations

[email protected]

+44 (0)20 3828 2747