FESE welcomes the work by IOSCO to identify and analyse the various regulatory issues raised by changes in market structure. Currently, European legislators are negotiating the review of the Markets in Financial Instruments Directive (MIFID I). In its proposal for a new MiFID (MiFID II), the European Commission has stated that ‘market and technological developments have outpaced various provisions in MiFID’. FESE supports the goals of the MiFID Review to further the integration, competitiveness, and efficiency of European markets. However, given the increased levels of competition and the subsequent fragmentation in European markets this IOSCO consultation is a timely contribution to examine how best to assist market authorities in relation to issues raised by market fragmentation.
In summary, FESE has the following comments on this consultation:
· Regulators must not act to unintentionally create further fragmentation
· Increased fragmentation could create a two-tier market
· Increased fragmentation can have a detrimental impact on price formation
· Need to ensure that the highest level of trading takes place on neutral and transparent venues
· Regulators must assess the impact of non-open and non-neutral venues on the real economy
FESE Response_IOSCO CR03_Regulatory Issues Raised by Changes in Market Structure_Final.pdf
