The Association for Financial Markets in Europe (AFME) has shared its response to the European Commission’s ‘targeted consultation on integration of EU capital markets in Europe’ – which closed today – highlighting several points of concern.
In particular, AFME stated that though its members share the EU’s goal of building deeper and more liquid markets which are globally competitive, proposals related to equity market structure do not align with that ambition.
Adam Farkas, chief executive of AFME, said: “The EU has a moment of opportunity to attract global capital and must focus efforts on targeted, evidence-based policy proposals, that focus on growing demand from all investor types and upholding the principles of competition and user choice. However, we are deeply concerned that some of the proposals related to equity market structure contained in the consultation are not conducive to this end.”
“On the contrary, we believe that measures which would reduce the complexity and high frictional costs of the current post-trade ecosystem should be prioritised and call for ambitious and innovative thinking to unlock competition in this space. We look forward to exchanging views with the Commission on this further ahead of the expected legislative proposal later this year.”
The broadness in scope of the consultation is a key factor for the association, wherein changing the regulatory framework for equities trading by taking inspiration from other jurisdictions does not sufficiently take into account the intricacies of Europe’s capital markets.
One example being the proposal for a US-style order protection rule, currently being debated for potential reformed or removal as confirmed by Hester Pierce, SEC commissioner in her ‘Horses and Bourses’ speech back in May 2025.
Read more: European Commission exploring US-style order protection rule among other market reforms
Speaking to this, AFME explained: “Any radical changes to microstructure would be highly undesirable and risk portraying the EU as being in a state of constant regulatory flux. Especially at a moment when investors – including those newly attracted to Europe in light of recent geopolitical trends – wish to navigate markets characterised by regulatory stability, predictability and consistency.
“Such detrimental changes would also burden market participants with considerable implementation and compliance costs.”
Other points raised include a call for measures to generate investor demand for EU securities, prioritising access to markets for all investors, and the establishment of a streamlined EU regulatory framework.
As part of the recommendations, the Association has called for an in-depth assessment of how the Lamfalussy process is functioning as the European Union has continued to develop its capital markets.