The WFE supports European Commission’s SIU efforts, but calls for stronger measures to drive growth

 

PRESS RELEASE

The WFE supports European Commission’s SIU efforts, but calls for stronger measures to drive growth

London, 5th June 2025 – The World Federation of Exchanges (WFE), the global industry association for exchanges and clearing houses, has published a response to the European Commission’s (EC) consultation on the Savings and Investment Union (SIU). The WFE commends the simplification and burden reduction objectives, but urges the EC to shift its focus from structural supervision reforms towards more impactful, growth-oriented initiatives.

The WFE cautions that the creation of a single supervisory authority will not, in itself, generate economic growth or meaningfully attract investment to European capital markets. 

Instead, the EC should prioritise:

• Tax Regime Reform: The introduction of tax-advantaged investment accounts is a strong start, but deeper reforms are essential. These include eliminating transaction taxes, reducing listing costs, and addressing the persistent debt-equity bias that discourages equity financing. Such changes would directly enhance investor participation and channel capital into productive sectors of the economy.
• Support for Investors: Empowering retail and institutional investors with access to risk management tools, such as regulated derivatives, and reducing paternalistic barriers to market entry are essential. A balanced approach to investor protection that includes financial literacy and experience - not just regulation - is vital for long-term financial resilience.
• Proportional, Principles-Based Regulation: The WFE continues to advocate for a shift from prescriptive, rules-based legislation to principles-based regulation that allows for a degree of divergence in how firms achieve compliance which would be a result of different and more innovative approaches to the same problem. Excessive regulatory burdens, such as those proposed under EMIR 3.0 and DORA, threaten to stifle innovation and delay much-needed advancements in post-trade infrastructure.
• Market-Led Consolidation: Any efforts to consolidate financial market infrastructure should be driven by market dynamics, not regulatory mandates, allowing efficiencies and synergies to emerge organically. Consolidation should enhance competitiveness, not undermine national expertise or create unnecessary supervisory overlaps.
• Bilateral Venues: A primary focus should be on ensuring that the internalisation of order flow is properly contributing to beneficial market dynamics. In particular, as liquidity is siphoned off exchanges, which are open to all market participants who wish to trade, into bilateral trading venues, the Commission should consider how this affects liquidity and best execution. This is not just important for investors, but it impacts market quality criteria that issuers consider before listing. 

Nandini Sukumar, CEO of the WFE, said, “We welcome the ambition of the Savings and Investment Union; and call for ambition to be aligned with economic reality. Real growth will come from removing barriers and giving investors the tools, incentives, and confidence to participate fully in European markets. The Single Supervisory Mechanism for banks is not something to emulate, such centralisation has not propelled EU banks into global leadership positions by market capitalisation. The EU should focus on actionable, high-impact areas such as tax incentives and investor empowerment to further growth.”

Richard Metcalfe, Head of Regulatory Affairs at the WFE, said, “We are increasingly concerned about the growing trend toward internalisation of order flow in Europe. The U.S. experience demonstrates that internalisation fragments markets and undermines price discovery - exactly what the EU is trying to prevent. Exchanges provide transparent, lit markets with equal access and robust investor protections. These essential benefits, and the clear distinction from opaque bilateral trading, must be recognised and preserved.”

Read the full response here.

For more information, please contact:

Cally Billimore                

Communications Manager        

[email protected]

+44 7391 204 007

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges, together with other exchanges feeding into our database, are home to over 49,054 listed companies, and the market capitalisation of these entities is $116.58 trillion; around $155 trillion (EOB) in trading annually passes through WFE members (at end 2024). 

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system. 

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system. 

Website: www.world-exchanges.org

X: @TheWFE

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