The World Federation of Exchanges (WFE) welcomes the opportunity to respond to ESMA’s Consultation on Market Structure. Market structure might, at first glance, seem like a technical discussion of trading venues and market participants, but it is fundamentally important for effective capital raising and ensuring the best outcomes for end investors.
In our response we:
highlight growing concerns about the continued expansion of bilateral trading, particularly because it relies on prices formed elsewhere and may gradually weaken transparent price discovery if its share of activity keeps increasing.
stress that ESMA’s picture remains incomplete without UK data on trading in EEA shares, meaning the true scale and shape of off-book and SI activity cannot yet be fully assessed.
explain that “addressable” liquidity should not be treated as equivalent to genuinely “accessible” liquidity, since multilateral venues provide fair, non-discriminatory access across the market.
underline that price discovery remains concentrated on multilateral venues, with the closing auction playing a particularly important role as the definitive end-of-day reference price.
Finally, the response emphasises that strong secondary trading matters not only for investors seeking fair and reliable execution, but also for issuers, because effective price formation and liquid secondary markets support valuations, reduce the cost of capital and make public listing more attractive.