The European Securities and Markets Authority (ESMA) published a call for evidence on the market structure of European equity markets on 30 April 2026, inviting stakeholders to provide feedback on current trading practices, market fragmentation, and the impact of regulatory changes. The consultation targets exchanges, investment firms, trading venues, and other market participants, seeking input on issues such as liquidity distribution, transparency, and the role of systematic internalisers.
The document, titled 'Call for Evidence on the market structure of European equity markets - Reply form', is a reference document for submitting responses. ESMA aims to gather data and views to inform potential future policy recommendations or legislative proposals. The call covers topics including the effects of MiFID II/MiFIR on equity market functioning, the evolution of trading volumes across different venue types, and the impact of technological developments such as algorithmic trading and consolidated tape.
Policy orientations and trade-offs
ESMA's initiative reflects a balancing act between promoting competition and ensuring market integrity. On one hand, increased fragmentation may reduce trading costs and foster innovation; on the other, it can impair price formation and transparency. The call for evidence explores whether current rules adequately address these trade-offs, particularly regarding the obligation to trade on regulated venues and the treatment of systematic internalisers.
Impact on stakeholders
- Trading venues: May face increased regulatory scrutiny or changes to competitive dynamics, potentially affecting their market share and revenue models.
- Investment firms: Could benefit from reduced compliance costs if rules are streamlined, but may also face new obligations if ESMA tightens transparency requirements.
- End investors: Improved market quality and lower costs are potential positives, but increased complexity could harm retail investors if not properly managed.
- Regulators: Gain better data to calibrate policy, but face resource demands to analyse responses and implement any subsequent reforms.
Expected institutional follow-up
ESMA will analyse responses to the call for evidence, with a deadline for submissions expected in the coming months. The findings may feed into a report to the European Commission, potentially influencing revisions to MiFID II/MiFIR or other legislative initiatives. No specific timeline for next steps has been announced.