BETTER FINANCE supports the direction of the Master Regulation to integrate EU capital markets, with less cross-border friction and a stronger supervisory architecture. From our perspective, its value should lie in lowering costs through less intermediation, more efficient post-trade/trading structures, and better access to products and markets across borders. A key proof point would be the scaling-up of (much-needed) EU total stock index funds to widen investor exposure and better channel funding toward EU listed companies/SMEs.
On ESMA’s role, we broadly support this to reduce arbitrage and inconsistent supervision. But stronger EU-level convergence should not only serve firms / infrastructures operationally; it should keep quicker intervention, clearer accountability, and more reliable investor protection across the distribution and execution chain as core objectives. Ultimately, offer and demand should be stimulated together, not treated in isolation.
We also support the incremental steps harmonising of trading rules toward more integrated liquidity. As fragmentation remains problematic, especially where liquidity is diverted into bilateral / internalised models; competitiveness should not mean over-reliance on SIs (or other bilateral channels) weakening fair and transparent price formation. Reform should instead foster lit-market innovation and competitiveness via less intermediation, a more level playing field to lower explicit / implicit trading costs while enabling EU access. To this end, we welcome the envisaged post-trade CSD / CCP reforms. As reform progresses, it should also call for more prescriptive best execution rules, rather than mainly discretionary/policy-based approaches, especially as removal of broker's execution venue report RTS create transparency gaps.
For post-trade, we support reducing settlement fragmentation by simplifying cross-border servicing, and enable cross-infrastructure access. Such fragmentation is not merely technical: it directly affects the cost and feasibility of cross-border investing, holding and exercising rights. Measures improving efficiency, competition and protocol consolidation, (including through T2S), are thus welcome – provided asset protection, legal certainty, investor information and cross-border investor / shareholder rights remain central.
On the CT, we see post-trade checks as the immediate priority, notably for best execution assessment, while pre-trade data may support execution assessment but remains limited as a retail tool (notably due to latency). Clear inclusion / identification of SI activity is essential. Importantly, the CT should support brokers’ execution monitoring and, over time, evolve into a comparative best execution standard / metric, rather than remain optional.
On cross-border fund distribution, we support streamlined notification / de-notification procedures, reduced gold-plating, and ESMA-based infrastructure to ease passporting. This should improve EU-wide product comparability and foster a genuine single market for investment products. Yet faster passporting must not weaken justified safeguards or create accountability gaps: simplification should aim to reduce friction, not weaken protection against misleading marketing or weak conduct controls.
Further scaling of the DLT framework could be beneficial, but requires caution and further assessment to ensure interoperability and avoid new proprietary / local fragmentation. Removing legal uncertainty should support market-infrastructure innovation and, over time, better EU integration. However, investor-protection issues remain central, notably ownership records, settlement efficiency, asset segregation while avoiding confusion around new models/services. A later debate on tokenised securities is also warranted, including to ensure derivative exposures are not sold as fractional shares. Finally, we will return to these points as we assess the detailed provisions and retail implications.