On 17 January 2025, the Digital Operational Resilience Act (DORA) came into effect, signifying a major step up for risk management within financial services across Europe. The obligations under DORA, while directed at financial entities (FEs), have important implications for the third-parties that provide information and communications technology services to the sector, many of which are not based within the EU. In this thought leadership piece, AFME and Murex identify several areas where tech providers can support the effective implementation of DORA, including through collaborative approaches in partnership with the financial sector. The proposals reflect the experiences of AFME members from the ongoing implementation of DORA but should not be construed as formal endorsement. Rather, the proposed avenues expose potential areas for future discussion and further exploration. In certain cases, the proposals represent longer term goals which would require an amendment to DORA’s legal text. The paper incorporates the views of Murex, a software provider with market exposure in trading, operations and risk management. This includes drawing on the insights of the Murex CISO, Thibaut Bachelier, who presented to the AFME Technology & Operations Committee at its annual Paris meeting on 30 April 2025.

The Association for Financial Markets in Europe (AFME), in collaboration with PwC Strategy&, has today published a comprehensive report analysing the state of European equity markets. Drawing on new quantitative data and insights from over 40 interviews with key market participants across the equity value chain, the report offers a detailed assessment of the current strengths and persistent challenges facing Europe’s equity markets. The research reveals a mixed picture. While recent reforms and steady market performance suggest some cause for optimism, deeper structural issues continue to weigh on Europe’s global competitiveness. The report identifies increasing investor participation as critical to Europe’s growth and competitiveness and recommends targeted interventions to simplify the regulatory framework and reduce the complexity of the ecosystem to support this.

The High-Level Roadmap is a significant step forward on the EU’s journey to T+1. The report sets out the key recommendations for the marketwide technical and operational changes necessary to deliver T+1 in October 2027, and we hope will be a valuable resource for industry participants’ project planning.

AFME has today published proposals in areas key to further scaling of DLT-based capital markets. These include implementation proposals for the , as well as ways in which DLT-based securities could be made eligible as collateral in central bank credit operations . Both the ability to settle DLT transactions in central bank money and to use DLT-based securities as eligible collateral are key to building liquidity and attractiveness of DLT-based markets.

AFME is pleased to partner with Linklaters in helping financial institutions navigate and implement regulatory requirementsas it relates to MiFIR/D II.Our updated publication builds on our first issue, which we published in October 2024, andcovers key developments in secondary capital markets in both the EU and UK from October 2024 to March 2025. We have analysed the key interpretation and implementation issues related to areas suchas market structure, transparency, market data, consolidated tape, execution of client order, transaction reporting and investment research. Our guide is primarily written for sell side firms operating in wholesale secondary markets, however, it will be of wider interest to other market participants.

AFME is pleased to announce the release of the latest edition of the European Primary Dealers Handbook. This comprehensive resource is designed to serve as a critical reference for participants in the European government bond markets, including dealers, brokers, debt management offices (DMOs), investors, and policymakers as well as journalists and academics. The Primary Dealers Handbookprovides an in-depth overview of the infrastructure and organisation of both the primary and secondary government bond markets across 20 European countries as well as the European Stability Mechanism (ESM). It outlines the organisation of the primary dealer systems in each country and the essential roles of primary dealers who provide liquidity and stability in these markets. The updated edition features revised content that reflects the most recent developments in market structures, regulatory frameworks, and policies affecting the European debt markets. Since its initial publication in 2008, the Handbook has been widely regarded as an invaluable tool for market participants and stakeholders. "We are committed to providing the most relevant and comprehensive information to those interested in the European government bond markets," said Victoria Webster, Managing Director at AFME. "This update to the Primary Dealers Handbookaims to provide market participants access to essential knowledge to navigate the evolving landscape of European debt markets." The new edition of the European Primary Dealers Handbookis available for download from the AFME website. For more information and to subscribe for updates, please visit AFME's website. *New chapter added March 2025

AFME and PwC have collaborated on a new report focused on Interest Rate Risk in the Banking Book (IRRBB), offering a comprehensive overview and expert insights into key areas of market and regulatory evolution in this increasingly critical domain. The report delves into crucial aspects, such as the balance required by banks between economic value and earnings-based measures. It also explores perspectives on enhancing standardisation within a Pillar 2 framework, alongside examining the interaction between IRRBB andCredit Spread Risk in the Banking Book(CSRBB).

This report is part of the European Benchmarking Exercise, a market-led initiative organised by AFME, EDW and TSI, and contains results from H1-2024. Its purpose is to highlight the quality and usefulness of disclosure in the European private cash securitisation market, both ABCP and balance-sheet financed, in order to assist market participants and reassure supervisors of the high standards of transparency that can be achieved in this market. CLOs, synthetic securitisations and public ABS are not in scope. It provides aggregated, transaction-level data gathered on a voluntary basis from 12 banks (BayernLB, BNP Paribas, Commerzbank, Credit Agricole, DZ Bank, Helaba, HSBC, ING, LBBW, Natixis, RBI and UniCredit) across 6 countries (Austria, France, Germany, Italy, Netherlands and the UK). The report shows that non-public securitisation markets are an important source of financing for the real economy. The overall private securitisation market is currently estimated at €232bn of total commitments, with the exercise-related dataset covering €79bn of those commitments. Private securitisations backed by trade receivables and auto loans/leases make up around 74% of the market, and if consumer loans and equipment leasing are included, the 4 asset classestogetherrepresent 88% of the market. This is the seventh in a series of such reports to be published biannually over time.

This paper provides a comprehensive view of the continuing rise in FI data costs since publication of our last such report, published in February 2022. We look again at the scale of the overall spend increase, what individual components are the main drivers of this increase as well as changes in the pace of increases of individual components and how these have impacted on the profile of overall spend. As previously, we have broken down the overall spend into 8 categories (terminals, pricing and reference data, exchange fees, research and analytics, data feeds, indices, ratings and other) from 6 types of providers (exchanges, MTFs, data vendors, brokers, ratings agencies, and index providers). In aggregate, the most notable, and concerning, aspect of the updated figures is that the characteristics and trends identified previously have persisted and, in some cases, actually accelerated. We find this to be particularly concerning in light of the position taken by the FCA in their wholesale market data study, published in February 2024, that ruled out making any significant intervention in the market. This was despite finding that competition was not working well in some areas and that, as a consequence, users may be paying higher prices than they would if competition “was working more effectively”. Across the sell side, growth in spend on overall (cross-market) market data actually accelerated. Costs grew by 25% between 2017 and 2021, a CAGR of 5.74%. Over 2022 and 2023 the annual rate of increase accelerated to 7.33% and reached an index value of 144 – a rise of 44% over 6 years. Looking at FI market data specifically, growth in spend continued to outpace the rate of growth in spend for overall market data, albeit with a smaller differential. Over the periods 2017-21 and 2022-23, FI spend increased at a CAGR of 10.7% and 7.7% respectively against increases in overall spend of 5.7% and 7.3% over the same periods. Separately, looking at growth in FI data spend vs growth in user numbers, again, growth in spend significantly outpaced growth in user numbers. Notwithstanding likely growth in usage per user, this metric suggests a continued increase in unit price. As noted above, over 2017-21 and 2022-23, annual growth in spend was 10.7% and 7.7% respectively whilst growth in users over the 2 periods was only 3.6% and 6.3%. Turning to individual spend components within the overall picture, the relative sizes of spend between components was broadly similar across the 2 periods. Some notable changes between the 2 periods were evidenced by a significant proportional increase in data feeds costs as well as a proportional decrease in spend on indices. Within this overall picture however were a number of eye-catching spend increases on individual components. Over the full 6 year period analysed, the most notable of these were Research & Analytics (110%), Ratings (75%) and Indices (57%).

Rising data fees to offset declining trading revenue burden market participants with surging costs Research by Market Structure Partners(MSP) reveals that European stock exchanges are increasingly turning to market data sales to compensate for adverse market conditions that should have resulted in a downturn in equity market revenues such as declining equity trading volumes, shrinking market share, and a diminishing customer base. This shift has dramatically driven up the cost of equity market data, which is essential for issuers, investors, and market intermediaries to conduct their daily business. The research, commissioned by a coalition of trade and other industry associations presents a critical analysis of how the equity market data business and fee structures of Europe’s largest exchanges (Deutsche Börse, Euronext, LSEG, Nasdaq Nordics and SIX Swiss Exchange Ltd) have evolved and how it stifles growth and innovation. Niki Beattie, CEO of MSPsaid “This Study shows the ease with which exchanges can rely on market data income to supplement what should otherwise be a natural decline in revenue and suggests that, as a result, market growth has become a secondary objective.European policymakers with competitiveness and innovation agendas should rigorously challenge the current separation of trading and data revenues at all trading venues.” Total equity market revenues consist of trading revenue and market data revenue combined. However, the market data pricing does not appear to align with the trading activity it underpins. Despite these adverse conditions, EU regulatory disclosures from Europe’s largest exchanges show that they appear able to sustain overall equity market revenues by increasing the portion that they generate from market data as trading revenues decrease. For example: Transacted value on Euronext’s equity markets reduced by 17% between 2020 and 2023. However, the total equity market revenue only declined by 0.5%. This is because market data revenues as a proportion of overall revenue increased from 11% to 19%. Transacted value on at Deutsche Börse’s equity markets reduced by 29% between 2020 and 2023. However, equity market revenue only declined 12%. This is because market data revenues as a proportion of overall revenue increased from 21% to 31%. Transacted value on Nasdaq Nordics’ equity markets reduced by 26.9% between 2021 and 2023. However, the total equity market revenue only declined by 8.8%. This is because market data revenues increased from 19% to 23%. LSEG only has to make regulatory disclosures for its EU subsidiary, Turquoise. Trading turnover on Turquoise significantly reduced between 2020 and 2022, some of which can be attributed to its sale of Borsa Italiana in 2021. Nevertheless, during the same period, market data as a percentage of overall equity revenue rose from 10.5% to 27%. These increases in market data revenue have occurred even though there are no specific costs for producing market data and the costs of running a trading platform, such as software, hardware, energy prices and other factors are stable or declining. Additionally, exchanges in the UK and Europe have run the same trading technology for more than a decade and there is no evidence of any significant expenditure in their accounts. Costs for disseminating data across the market are borne by third parties. The research argues that, exchanges have managed to maintain revenues by charging higher prices to fewer participants for more limited data. This appears to have been achieved through the introduction of arbitrary and complex fee structures that are based on multiple factors including: user type (broker/agent), competitive status, professional versus retail users, data consumption method (human use on display terminals versus machine use of non-display data), and number of devices that may be able to see the data. Restrictive clauses also limit data use to exchanges' predefined purposes, making it hard for innovators to use data without taking on indeterminate financial risk. As a result, every firm and user has a different cost profile and, if an exchange lowers prices for one set of customers, it may offset the revenue loss by raising prices for other customers. The pricing model has led to extraordinary price increases, particularly as exchanges appear to seek to stem losses that arise that result from their customers’ increasing automation. Most dramatically, under certain conditions, it is now 35 to 97 times more expensive in 2024 for a machine to use data compared to the cost for a human to use the same data for the same activities in 2017. Additionally, according to the research, firms that compete with traditional stock exchanges, either as trading venues or index providers are amongst those that have seen the most dramatic price increases. Competing trading platforms have seen costs rise by up to 481% between 2017 and 2024, while proprietary index creators that compete with exchange owned indices experienced cost rises between 97% and 170% across three exchanges over the same period. Since the introduction of MiFID I in 2007, these exchanges have collectively earned at least £5.67 billion from market data, justifying their pricing as essential for the maintenance of fair and orderly markets but other competing trading venues have managed to become profitable and process similar volumes in a fair and orderly manner without the same reliance on market data revenues. If market data costs were directly correlated to market share, the study finds that exchanges, leveraging their incumbent status, could have generated up to £4.93 billion (€5.83 billion) in surplus revenue from market data fees since 2008. Alternatively, they could be earning up to 7.64 times more than competitors for processing similar volumes and market share. The research raises critical questions about exchanges' role in regulated markets including: whether they are truly serving the equity market community, whether they are investing in equity market development and whether regulation has kept pace with the evolving business models and interests of exchanges where equity markets are now a minority business. Ultimately, the Study argues that market data's value must align directly with trading activity. It calls for regulation to ensure data is treated as a by-product of trading by all trading venues rather than a separate revenue stream. Failing that, legislative intervention should redefine all trading venues’ objectives to ensure they support market growth as their primary objective explicitly. Once the transparency of exchange data fees is improved, it will be easier to understand the pricing of data dissemination imposed by third party data vendors within the value chain. "This study reveals a concerning trend in European equity markets," saidMike Bellaro, CEO of Plato Partnership. "When essential market data becomes disproportionately expensive, it creates barriers to entry and stifles the very innovation that policymakers are trying to encourage. This is particularly relevant as the UK and European Union seek to enhance their market competitiveness." Adam Farkas, CEO of AFME, said: “Accessible market data is a critical component of healthy and well-functioning capital markets. Irrespective of the asset class, data empowers and allows all market participants to make informed decisions when allocating capital which in turn, supports a competitive and growing capital market. We thank Market Structure Partners for undertaking this critical research which shows that the much-needed growth in Europe may be undermined if attention is not paid to these concerning developments”. Thomas Richter, CEOof the German Investment Funds Association,BVI, said: “Asset managersare legally forced to usestockmarketprices, benchmarks, credit ratings, and other datafrom third-party providers.Because of the existing oligopolymarket structures with only a few providers per segment, there is a case for competition law authorities.We call for an EU data vendor act that regulates the commercial behaviour of these entities.Because if we don't, the already considerable cost pressure in thefundindustry will intensify even further – also to the disadvantage of the consumers.” Tanguy van de Werve, Director General of EFAMA, said: “Competitiveness is high on the policy agenda, including boosting the competitiveness of EU capital markets. Addressing the harmful impact of the oligopoly at the heart of market data access would lower trading costs, encourage new market entrants, and promote innovation. EU capital markets are underperforming their global peers, a trend that has only solidified over the last few years. Tackling high market data costs should be an obvious choice for policymakers looking to reinvigorate European capital markets.” Piebe Teeboom, Secretary General of the FIA EPTAsaid, “The MSP report evidences the ongoing increase in the cost of market data over recent years. This adds significant cost to participating in European financial markets, at a time when Europe is focussed on finding ways of boosting growth and competitiveness. In the interests of ensuring Europe remains an attractive destination for capital allocation, we encourage policy-makers and regulators to consider how the report’s findings impact these objectives.”