ESMA publishes analysis on the evolution of EEA share market structure since the application of MiFID II

ESMA has released an analysis on the evolution of the EEA share market structure since the implementation of MiFID II, with a specific focus on the period from 2019 to 2022. The analysis delves into the impact of the UK’s withdrawal from the EU on equity markets, emphasizing the changes observed in trading volumes, the number of trading infrastructures, share trading distribution, and the concentration of trading in specific EU countries and venues.
Key findings indicate a significant decrease in trading volumes after 2021, attributed to the impact of the UK’s withdrawal. Four main changes are highlighted: a decrease in the number of trading infrastructures, a shift in share trading distribution across market types and countries, a concentration of trading in a few EU countries and venues, and a relocation of domestic trading activities. Additionally, there is a rise in the specialization of trading venues.
The analysis underscores the importance of understanding the evolving market structure for ESMA in terms of financial stability and orderly markets. It emphasizes the need to assess these changes to „improve the level-playing field between execution venues,“ a priority area for the MiFIR Review.
The article further provides background information on the EU CMU initiative, legislative proposals, and external events influencing European equity markets, such as the COVID-19-related market stress and mergers among exchanges. The focus is on promoting effective and stable financial markets while balancing the benefits of competition among trading venues and potential challenges posed by a fragmented trading landscape.