Following the publication of the EU-wide stress test results by the European Banking Authority today, the Association for Financial Markets in Europe (AFME) issued a statement on behalf of its members that participated in the exercise. Caroline Liesegang, Head of Prudential Regulation at AFME, said: “AFME welcomes the results of this year’s EBA stress tests. Despite an extreme ‘adverse scenario’ including high and persistent inflation and a severe decline in EU GDP, plummeting by 6% over the 3-year period, this year’s stress test shows that the steps that both banks and supervisors have taken over the years to strengthen the resilience of the EU banking sector are now paying off. “The results reflect a better starting point for banks, with higher levels of capital, improved asset quality and profitability driving the change compared to the previous stress test. We also note that EU subsidiaries of international banks, included in the EU-wide stress test for the first time this year, have finished the exercise showing a robust solvency position. “Notwithstanding the overall positive outcome, we urge the EBA to take a fresh look at the stress test methodology and remove or at least recalibrate some of the existing constraints that often override banks’ bottom-up projections. The EBA stress test follows a constrained bottom-up approach, involving banks in identifying risks using their own models to encourage better risk management practices. A successful stress test should find a balance between supervisory standardisation and accommodating individual bank characteristics. “Finally, the new banking package (CRR3/CRD6) - the entry into force of which is expected by January 2025 - will warrant a comprehensive review of the EU stress test framework. The structural changes to the calibration of the Pillar 1 framework combined with other overlaps across the Pillar 1 and Pillar 2 capital risk coverage warrant a critical assessment of the methodology. “We look forward to working with the EBA in further evolving the methodology for the 2025 stress test.” In particular: Compared to the previous exercise, with an average depletion of 459 bps under the adverse scenario and the average the CET1 ratio in 2025 at 10.4% the results are an improvement to the 2021 exercise, under which the average capital depletion was 497bps, and the end-state CET1 ratio under the adverse scenario was 10.2%. Net interest income is the largest contributor to the increase in earnings (938 bps) and capital over the stress period, even if capped at the level of the starting point. Credit risk losses are the main negative contributor, with the increase in losses under the severely adverse economic scenario contributing 405 bps depletion to the CET1 ratios. It is also worth mentioning that market risk losses under the adverse scenario contribute 112 bps to the depletion in CET 1 ratios. As a new feature of the 2023 EU-wide stress test, net fees and commission income (NFCI) projections were prescribed to banks based on a centralised top-down model. Under the adverse scenario, the aggregate NFCI and dividend income decline by 22% on average over the three years of the horizon. In terms of wholesale activities, net trading income (NTI) drops significantly during the first year of the adverse scenario, marking a loss of 55bn EUR. The main drivers of the NTI drop are losses from positions in economic hedges, held with a trading intent (HFT) and liquidity reserves. HFT losses that were floored for banks’ projections amount to 21.5bn EUR (-25 bps), while client revenues in 2023 dropped by 44% (from 36bn to 20bn EUR), providing still a positive cumulative contribution to the NTI in the three years of the adverse scenario. Elsewhere, we note that the one-size-fits-all nature of the methodological constraints may severely impact banks’ final results based on business model rather than risk profile. The constraints in the methodology have a significant impact on specific areas of banks depending on bank specific business models. In particular, this year’s stress tests resulted in severe shocks for markets and securitisations businesses. Furthermore, with limited modelling allowed in net interest income and a uniform methodology applied to different business models, national and business model specificities with regard to net interest income may are not reflected in the outcome of the stress tests. Given the constraints, in many cases the bank internal view of risks and the impact of the stress scenario is not in line with the final stress test results. This discrepancy and banks’ inability to reconcile the differences makes it difficult to explain the results to the market. AFME supports improving the transparency of the constraints and overlays applied to the bank specific results and of the top-down models developed by the EBA and the ECB to calculate (e.g. fees and commissions) or challenge banks’ projections. AFME welcomes the expected revisions to the EBA methodology, and is willing to collaborate with the EBA to develop the roadmap to 2025 stress tests. In this context, AFME is particularly concerned about the severe treatment of capital markets activities in the EBA stress test methodology and scenarios vis-à-vis more traditional commercial and retail banking products. This creates a level playing field issue for banks that serve clients and finance the economy through these activities. AFME looks forward to discussing ways to address this level playing field issue with the EBA. We specifically highlight concerns with the market risk methodology, suggesting a need for revising the prescribed floors on trading losses and addressing the lack of coherence and over-conservatism. The former in many cases replaces banks’ hard work on full revaluation of market risk under the scenario with a simple balance sheet multiplier, which is not risk sensitive. Beyond this particular case, the market risk methodology includes multiple shocks (full revaluation impact, increase in market liquidity reserves and loss of client revenues), which may be either mutually exclusive or overly conservative. In addition, the market risk methodology assumes that losses suffered in the first year of projections are never recovered in subsequent years, which is not aligned with the history of past market risk episodes. Finally, AFME and its members are keen on re-establishing of the process, with hopefully the number of ad-hoc templates reduced for future exercises. While we understand that there was an acute desire to capture data on topical items in direct response to the recent interest rate risk issues that resulted in bank failures in the US, it is difficult to manage the workload and commitments when additional templates are added late in the process. AFME recommends that the authorities should use where possible the alternate years when the EU-wide stress tests are not run to look at any additional targeted exercises outside the main perimeter of the EBA stress test. ENDS -

In response to the UK Government’s Mansion House reforms, announced today, including the publication of the Investment Research Review, allowing for optionality on how to pay for investment research, Adam Farkas, CEO of the Association for Financial Markets in Europe (AFME) commented: “Today’s reforms from the UK Government are another welcome step towards driving greater access to capital markets, following the positive rulebook changes proposed in the Wholesale Markets Review. “In particular, AFME members are supportive of the UK Government’s approach to the provision of investment research which allows for more flexibility in that clients will have the option to choose how they pay for the research they consume, whether bundled or unbundled, by removing the requirement on market participants to unbundle which is currently contained in the EU’s MIFID II legislation. “It should also be noted that the investment research market is inherently international and further changes to the UK’s regulatory and legislative environment in this area should prioritise, where possible, alignment with other jurisdictions. It should also provide a level playing field for both UK providers and consumers of research competing with international counterparts. AFME notes that similar themes are being addressed in ongoing discussions by other policymakers, and it is important for the respective UK initiatives to take account of developments in other jurisdictions such as the US and EU. “From our own analysis, AFME has found no evidence to support a causal link between the introduction of the unbundling rules and the pre-existing declining trend in SME research coverage. Among the numerous surveys and reports AFME has conducted on this topic, no respondents have identified the unbundling regime as a causal factor in declining SME coverage. “Noting the UK proposals on a new research platform and a pre-public offering arena, AFME will be interested in assessing the scope and objective of such new infrastructures and their impact on UK financial markets and their users.” On simplification of prospectuses: “AFME fully supports simplifying rules for prospectuses, both in the context of making procedures, disclosure and oversight more effective and efficient in primary issuances and also in the context of questioning if or when a prospectus (or other shorter form document) is needed for a secondary or follow-on issuance. These are welcome proposals which will go a long way towards increasing the attractiveness of the UK as a venue for company listings.” – Ends – Note to Editors: AFME and UK Finance response to Investment Research Review Call for Evidence https://www.afme.eu/Portals/0/DispatchFeaturedImages/UK%20Finance-AFME%20response%20to%20IRR%20Call%20for%20Evidence%20-%2024April23%20-%20Final.pdf AFME reports which find no evidence of a causal link between unbundling rules and the decline in SME research coverage: Bridging the Growth Gap, BCG report (February 2015) Raising Finance for Europe’s Small & Medium Sized Businesses: (September 2015) The Shortage of Risk Capital for Europe’s High Growth Businesses (March 2017) Recapitalising EU businesses post COVID-19, PwC report (January 2021) Introducing a New Hybrid Recapitalisation Instrument for Smaller EU Corporates, PwC and Linklaters report (November 2021) AFME Capital Markets Union Key Performance Indicators – Fifth Edition (November 2022, pages 83-85) AFME Response to EU Listing Act Consultation – Research Section (March 2023, page 16)

AFME has today responded to the European Commission’s consultation on the first set of European Sustainability Reporting Standards (ESRS) – a key instrument to enhance the availability of sustainability information, reduce gaps in sustainability-related information and enhance the usability of the broader EU sustainable finance framework. Oliver Moullin, Managing Director, Sustainable Finance, said: “The Commission’s efforts at streamlining reporting obligations can enhance proportionality and reduce the overall burden for companies. However, it should strike a balance with the overall objectives of the standards to strengthen disclosures, counter greenwashing, and enable financial institutions to fulfil their own disclosures, as well as investment decisions and risk management.” “To ensure that financial institutions can effectively comply with their reporting requirements, it is essential that the Commission provides a solution to enable them to report effectively where relevant metrics have been omitted by their counterparties due to not being assessed as material.” Under the proposed ESRS, companies can now decide to omit certain datapoints if they assess the information not to be material. These datapoints, however, include information required by financial institutions to comply with their own disclosures and must be included in Pillar 3 and the Sustainable Finance Disclosure Regulation (SFDR) reporting on a quantitative basis. Proxies or estimates would not be effective for this purpose and may expose firms to liability risks. AFME’s response elaborates on the need for this urgent solution, and puts forward recommendations aimed at striking the balance between flexibility and phase-ins with the regulatory expectations and disclosure requirements already applying to financial institutions. AFME also recommends that the Commission continues to improve interoperability between ESRS and international standards by (i) strengthening its engagement with the International Sustainability Standards Board (ISSB), including in relation to the financial materiality assessment, and (ii) developing comprehensive tools to map and help companies navigate the differences between EU and global standards. – Ends –

In response to the Financial Conduct Authority (FCA)’s announcement today that it will consult the industry on reforms to improve markets and bolster competitiveness, including a UK consolidated tape, Adam Farkas, CEO of the Association for Financial Markets in Europe (AFME) commented: “The UK financial regulator has today set out further details of how it plans to make UK markets more competitive, including a focus on a single consolidated tape provider per asset class. This is a welcome step as it will help to ensure that associated data costs remain as low as possible, while addressing the current fragmentation of post-trade transparency data. A single consolidated tape provider will also be easier for the official sector and industry to monitor. “AFME supports the development of a consolidated tape and the role it plays in improving data quality. However we recognise that even an appropriately constructed consolidated tape will not fully address the current unacceptably high cost of market data. We trust that the FCA’s extensive work on wholesale data will help address anomalies in this area, which are detrimental to financial markets and their users. “Open and constructive engagement with industry stakeholders is an important process for the development of high quality regulation, which in turn promotes strong and healthy financial markets and, ultimately, growth.” AFME advocates for evidence-based policy making and we are extremely supportive of the rigorous approach that the FCA has adopted in relation to the cost benefit analysis supporting its policy positions.” On the development of a UK consolidated tape, AFME’s position is: A single independent consolidator for each asset class (i.e. shares and bonds) is appointed. The consolidated tape is offered at fair and appropriate price levels for professional and non-professional users respectively to ensure that is commercially successful. The consolidated tape is sold with a simple, single market data licensing framework covering a variety of use cases. With industry stakeholders’ involvement, data quality is addressed alongside the development of the consolidated tape, and the FCA is empowered to monitor and enforce the quality of data provided to consolidated tape providers. Mandatory contribution from all venues to the tape is required. There is no mandatory consumption of the consolidated tape. On the bond Consolidated Tape, the post-trade consolidated tape ensures committed liquidity providers are not exposed to undue risk, especially when trading in illiquid instruments or transactions above a certain size, given that there are relatively long timeframes to unwind or hedge the trade in such instances. On the Equities Consolidated Tape, the consolidated tape includes an ambitious level of pre and post-trade data. This tape should be continuous and operate in real time to ensure that it gives users a complete picture of the market while remaining commercially viable. AFME looks forward to analysing the details of the papers and to engaging with the FCA on this fundamental issue. – Ends –

As trilogue negotiations take place on the Corporate Sustainability Due Diligence Directive proposal later this month, the Association for Financial Markets in Europe (AFME) has today published a position paper, outlining its recommendations for negotiators and calling on them to focus on ensuring that the regulation provides a practical and appropriate approach for financial institutions. Oliver Moullin, Managing Director at the Association for Financial Markets in Europe (AFME), said: “As the negotiators continue discussions on the CSDDD, we want to outline the key challenges that arise from the proposed scope of the value chain for financial institutions and the practical application of due diligence requirements to financial services. As the co-legislators seek an agreement, it is essential to ensure that the directive does not harm the competitiveness of EU companies or the role of banks in providing finance to support the transition. “To ensure that the Directive can become an effective tool for financial institutions to carry out due diligence, identify material risks, engage with their clients, and promote best practices across the investment value chain, it is necessary to ensure that the proposal takes a proportionate, risk based and workable approach and that it provides a clear, practical and legally certain framework.” A workable and effective compromise would be based on addressing the following priorities: Value chain: limiting due diligence requirements to upstream direct business relationships would address the significant challenges with applying the due diligence requirements to financial institutions’ downstream value chain. To the extent that financial institutions’ downstream value chain is included, it should be limited to the activities of large corporate clients directly receiving loan or credit services in the EU. It is crucial to ensure a harmonised approach to this within the Single Market. Risk-based due diligence: while entity-level due diligence policies shall be updated periodically, the identification of adverse impacts shall only be conducted prior to client onboarding and specifically for the provision of subsequent loans. Identification can’t be conducted effectively for other types of transactions e.g. before every individual payment or trade is executed, nor can banks ensure continuous monitoring of potential adverse impacts across all counterparties. Preventing and mitigating adverse impacts: a requirement for financial institutions to terminate the provision of financial services can have detrimental effects on the stability of European markets, and should be reconsidered. The Directive should avoid the use of ambiguous or unclear wording that may lead to different interpretations and, in turn, to legal and liability issues. Civil liability: civil liability should be clearly limited to circumstances where “intentionally or through gross negligence” a breach occurs that causes or directly contributes to the adverse impact, and where there is a direct causal link between the companies’ operations and the damage. Combating climate change – transition plans: the Directive shall ensure consistency and coherence with CSRD and existing EU and international initiatives, without additional requirements that might cause divergence. Directors’ duties: Article 25 interferes with national provisions regarding directors’ duty of care, potentially undermining directors’ duty to act in the best interests of the company.

Following the political agreement reached today between the Council of the EU and the European Parliament on the Markets in Financial Instruments Regulation (MiFIR) file, Adam Farkas, Chief Executive of the Association for Financial Markets in Europe (AFME) commented: “AFME acknowledges the achievement of the negotiators in reaching a political agreement on this important piece of regulation, which governs how financial markets function in the European Union. While there was understandably strong momentum to reach a deal following the recent commitments of leaders of various key EU institutions, the substance of the agreement is even more important and some specific aspects of the deal are likely to lead to suboptimal outcomes. A relatively limited number of political issues have dominated the trilogue negotiations which has resulted in less consideration for other, equally impactful, issues which are more technical in nature. “AFME in particular regrets that the determination to create an ambitious, real-time equity consolidated tape with sufficient pre-trade information has been lost through the negotiations.This was an opportunity to create a single, worldwide window to the equity market in the European Union and to reduce the costs of market data, which has been a long-standing issue in assessing Europe’s competitiveness. It is a missed opportunity for developing the Capital Markets Union and its key aspiration for easier access to equity capital markets, as well as for mobilising investors and supporting issuers. “In setting out extremely detailed rules regulating fixed income markets in level 1 legislation, the co-legislators have also failed to appreciate the fast evolving nature of financial markets in Europe and globally, which in the short-to-medium term may work to the detriment of users of EU capital markets and the EU’s strategic autonomy.” More specifically: On equities: AFME is disappointed that the opportunity has not been seized to fully remove features of equity market structure that unfortunately make the EU a global outlier and place it at a competitive disadvantage to international peers. That said, AFME welcomes the efforts to mitigate some of the restrictions on certain types of trading that have been in place through the current Double Volume Cap (DVC), for example. AFME supports data-driven policymaking. In assessing whether trading away from incumbent markets could impact the price formation process, we question the merits of placing a minimum floor below which alternative execution venues may not be available to investors, which somewhat pre-empts, and thereforeconstrains, ESMA’s future evidence-based assessments. On fixed income: AFME supports the removal of Article 18 on pre-trade transparency for bonds. This will align EU markets with practices across the most sophisticated markets globally. AFME is disappointed to see the lack of any evidence corroborating the changes to post-trade transparency and, in particular, that maximum deferral periods are codified in the Level 1 framework. A greater use of delegations to ESMA for the purpose of evidence-based calibration would have been far more appropriate. EU capital markets do not operate in a vacuum. AFME is concerned that the inflexible nature of the deferral framework in level 1 prevents the EU from having the agility to respond to evolving regulatory changes in third country jurisdictions or to make adjustments under stressed conditions. AFME stands ready to analyse the full agreement and texts once they become available and looks forward to engaging with ESMA with respect to the level 2 mandates it has been granted. – Ends –

Commenting on the legislative proposals on Financial Data Access (FIDA) and on Payments Services (review of the Payments Services Directive (PSD) and the new Payment Services Regulation (PSR)) published today by the European Commission, James Kemp, Managing Director at the Association for Financial Markets in Europe (AFME), said: “For financial services, both the EU’s proposed FIDA framework and the proposals on PSD/PSR could enable access to new, broader data sets to enhance the way banks operate, encourage innovation across sectors, and support a more effective and efficient payments system. AFME welcomes, in particular, the possibility of “reasonable” compensation for data within FIDA, as this is crucial to ensure fair allocation of costs across the data value chain and to safeguard competition. We also believe that compensation should have been introduced in the proposed modification of PSD/PSR. “However, with innovation comes the potential for unintended consequences, such as sharing data with participants in other sectors who may already have a dominant share of both individual and corporate data, which could lead to monopolies and the exploitation of data. Therefore, AFME has identified four key principles to help address these risks and to support policy makers in the development of a robust FIDA framework and an enhanced payments services system. “AFME stresses that a level playing field is crucial for participants in the EU data economy. The new proposal includes new data sharing obligations which encompass the majority of customer data held by banks. Imposing these obligations only on financial institutions could deepen the competitive asymmetry between banks and other participants in the data economy from other sectors which are not subject to equivalent obligations. “Both pieces of legislation should prioritise interoperability with existing frameworks and an important level of standardisation across sectors. The industry schemes set forward in FIDA will be essential to achieving this interoperability as well as ensuring a level playing field, an appropriate framework for compensation, clear liability standards, and cross-sectoral data standardisation. “Going forward, it is crucial that both the future FIDA framework and updated PSD/PSR take into account the broad global context of digitisation, ensuring that the EU remains open to global sources of innovation, standards and markets. The EU’s data sharing frameworks should be fair (same rules for all participants), competitive (with clear incentives and reasonable compensation) and safe (include clear liability provisions). These principles are crucial to the development of flexible, future-proof regulation that will support the overall competitiveness and growth of the EU.” Specifically, AFME: Stresses that both pieces of legislation should ensure a level playing field for data sharing. In order for a FIDA framework to flourish, there must be consistent and appropriate regulatory oversight, including consistency with other frameworks which are not yet implemented such as the Digital Markets Act and Data Act. Consistency across sectors is key in order to support innovation and discourage monopolies, encourage competition and efficiency, as well as lowering costs for both corporate and retail customers, creating a robust and effective data economy across sectors. Supports interoperability and an appropriate level of standardisation. A robust data economy and its positive long-term impacts will be supported by both interoperability and an appropriate level of standardisation both across EU Member States and on a global scale. Interoperability should also support a level playing field so that, if data is being shared outside the financial services sector, it is still subject to appropriate requirements and remains high quality and fit for purpose. Relying on market-led schemes for the implementation of the data sharing obligations will in principle lead to increased standardisation than the implementation of PSD and PSR, facilitating greater use of data by third-parties. Consistently support an appropriate framework for compensation in both proposals. Compensation is important in order to ensure fair allocation of costs across the data value chain and to safeguard fair competition. Compensation, with a margin for all technical and administrative costs, as well as infrastructure and provision of data services, is also important to incentivise data holders to maintain a high level of quality, making data more reliable. Data reliability also supports a robust data economy and mitigates risks to data integrity, data security, regulatory compliance and the accuracy of end products for both corporate and retail consumers. We believe that compensation should also have been introduced in the proposed review of PSD and PSR. Welcomes the further progression of clear liability provisions. This will provide legal clarity with respect to the access, processing, sharing, and storage of data. In addition to both pieces of legislation setting out liability provisions, they should also support and enable contractual agreements as these are crucial to fill any gaps in new use cases, or specialised scenarios which may require additional clarity on the legal, technical and other conditions governing data sharing. - ENDS -

In response to this week’s agreement by the European Parliament, European Council and European Commission of the CRR3 and CRD6 proposal, which were agreed in December 2017 and will implement the final Basel III rules in Europe, concluding the postfinancial crisis regulatory repair programme, Caroline Liesegang, Head of Prudential Regulation at the Association for Financial Markets in Europe (AFME), welcomed the agreement: “This agreement will strengthen banks’ resilience and recognises their role in financing the economy. European banks have raised hundreds of billions in equity capital since the financial crisis, resulting in record capital levels and strong resilience - as demonstrated by recent events in the banking sector. These market events also show the soundness of the banking system is not necessarily only about regulatory requirements setting capital levels, but also require effective supervision. AFME therefore cautions against driving up minimum capital requirements further without a comprehensive economic assessment. Going forward, we expect the impact of the agreement to be closely monitored in line with the Commission’s impact assessment. “AFME in particular supports the agreement to maintain a limited number of adjustments to reflect European market specificities while remaining faithful to the Basel principles and the corresponding global standards. Improvements to the treatment of exposures to unrated corporates and low-risk real estate lending as the Output Floor is introduced are also welcome. The recognition of the floor’s impact on securitisation and the introduction of a transitional arrangement to mitigate this is also positive. This being said, a more extensive review of the capital treatment for the securitisation framework will be important in the future to ensure this tool can effectively finance transitions needs between bank balance sheet and market funding of the economy. “AFME also notes the co-legislators’ desire to bring forward the Basel framework for cryptoasset exposures. While a full implementation of the international standard would have been preferable, rather than a transitional treatment, work should now be prioritised to develop a final standard concurrent to the Basel Committee completing its ongoing reviews. “It will be important that between now and the finalisation of the text that the implementation date of 1 January 2025 is kept under close review to ensure global consistency and competitiveness.”

Commenting on the agreement reached between the European Council and European Parliament today on the Central Securities Depositories Regulation, Peter Tomlinson, Director of Post Trade at the Association for Financial Markets in Europe (AFME) said: “AFME welcomes the political agreement in today’s trilogue negotiations, which views mandatory buy-ins as a measure of last resort, to be activated subject to assessment and only in the case where the level of settlement fails in the EU has not reduced and is deemed to pose a financial stability risk. AFME supports further focus on all other tools that would be more appropriate to support settlement discipline and efficiency in Europe. “The CSDR Refit legislation in the EU will include a mandate for ESMA to undertake an assessment on the possibility of shortening the settlement cycle in the EU. AFME looks forward to engaging with European authorities and market participants on this topic as part of the new European industry Task Force which was established by AFME earlier this year. The task force will examine all aspects in this debate, including direct economic costs and savings to the industry, as well as factors relating to global alignment and market attractiveness.” - ENDS -

EU asset managers, banks and brokers are today urging policy makers not to concede to pressure which will lead to suboptimal outcomes in the review of the Markets in Financial Instruments Directive (MiFID/R). Ahead of important trilogue negotiations taking place next week, the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), and the German Investment Funds Association (BVI) have issued a statement calling on the co-legislators to take an evidence-based, ambitious approach, even if that means that more time will be required to complete the negotiations. The MiFID/R Review is a key underpinning for the completion of a Capital Markets Union (CMU) that works for investors and issuers, and it is fundamental to ensure that EU capital markets across asset classes are more integrated and competitive globally. Policy makers will bear the responsibility if EU capital markets continue to fail their users, including corporates seeking the best valuation for their assets and investors looking for the most sustainable and highest returns for their savings. Furthermore, if policy makers cannot pass legislation to build critical market infrastructure to stem the investment flows leaving the EU, this risks putting the EU at a disadvantage to other global markets. Equity Markets EU companies continue to take their IPOs outside the EU, or to move their listings elsewhere to seek better valuations. EU equity markets cannot continue to lag behind their peers. In making rules, policy makers must consider in particular the impact that such rules will have on market liquidity, which is a key consideration for companies seeking better valuations to finance their investments. Similarly, investors, banks and other market participants have already stated that a consolidated tape for equities must include 5 levels of real-time pre-trade data and must be reasonably priced to succeed, or it will be useless for the potential consumers of such data, and not commercially viable for its operator. EU policy makers already failed to effectively deliver the consolidated tape once, in 2018. We therefore urge the Co-Legislators and the Commission not to be complacent by conceding to the loudest voices of established interest parties, and to rise to the challenge of delivering efficient, more integrated, and globally competitive EU equity markets. Fixed Income Markets Fixed income markets that are liquid and attractive globally are also a key underpinning for a successful CMU. While other jurisdictions are also undertaking substantial reviews of their bond market transparency frameworks, we urge policy makers not to undermine the future viability of EU corporate and sovereign bond markets by enshrining in legislation requirements that fail to deliver a well-calibrated transparency framework that protects investors and fails to address the challenges arising from future evolutions in the regulatory environment outside the EU. In reviewing the EU framework for bond deferrals, policy makers must also consider the detrimental impact that such new rules will have on market liquidity, which have not been discussed, let alone demonstrated. The current proposed calibration ignores the fact that price and volume deferrals should be aligned, especially for the larger, less liquid trades. Market Data While we welcome the Parliament’s efforts to strengthen the protection of data users by making clear that prices of market data need to be based on cost of production and by recognising that market data is a by-product of trading, we note that the proposed compromise still allows for the practice of charging for data based on the value it brings to the user (so called value-based pricing). Value-based pricing should be disallowed to achieve better outcomes for investors and the general public. - ENDS -