More than 20 years following the launch of the single currency, the euro has become the second most important currency in the world. Recent shifts in global political and economic powers have pushed the Union to try and identify ways that promote a more diversified and multipolar system of several global currencies. Reflecting the euro area’s economic and financial weight, a more diversified system of global currencies would make the international economy more resilient to shocks.

To this end, in December 2018 the European Commission published its communication “Towards a stronger international role of the euro”, outlining the work streams to increase trust, usage, and attractiveness of the euro at international level. Complementing the communication, the Commission launched a series of consultations in 2019 with the goal of gathering feedback from a variety of sectors and actors to better understand the mechanisms which underpin the use of the single currency. Comprehensive set of initiatives was outlined, including the following aspects:

• Completion of the Europe’s Economic and Monetary Union;
• Banking Union and CMU measures to foster a deep European financial sector;
• Initiatives to support EU financial markets infrastructures as well as to strengthen the EU sanctions regime;
• Promoting the use of the euro in key strategic sectors.

Deutsche Börse Group has warmly welcomed the vision set out in the Commission’s guidelines and notably the goal to establish EU27 as a competitive and prospering economic area supported by financial markets built on principles of stability, transparency, and fairness. As part of our contribution, we identified different avenues of strengthening the international role of euro: directly, by increasing the trust and attractiveness of the currency itself; and indirectly, by supporting products and services denominated in Euro as well as the Eurozone’s financial ecosystem.

Increasing trust in euro will require the aforementioned reform of the Eurozone with regard to the Economic and Monetary Union, completing the Banking Union, as well as bringing the CMU to life. In addition, based on a “fit-for-purpose” regulatory framework, market-led solutions can make a critical key contribution by providing for a virtual symbiosis between stability and growth enhancement. Thus, boosting the use of the euro in key strategic sectors, such as for example commodity markets, and making progress in securing systemically important euro-denominated markets will contribute significantly to making the EU more resilient to shocks and ensuring its competitiveness.

Following the Covid-19 pandemic, the recovery fund and the Recovery Resilience Facility which entered into force in February 2021 will increase the supply of safe assets denominated in euro and help strengthen the resilience and the sovereignty of the Eurozone and ultimately the international role of the joint currency.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.

As a lesson learnt from the financial crisis 2007/2008, the European Union aimed at establishing a more integrated European supervision in order to ensure a true level playing field for all actors at the EU level and to reflect the increasing integration of financial markets within the EU. The introduction of the European System of Financial Supervision (ESFS) in 2010 marks the first time a new supervisory architecture was established at the European level, consisting of three European Supervisory Authorities (ESAs) and a board to monitor systemic risks – the European Systemic Risk Board (ESRB). The ESAs and the ESRB started their operations in January 2011.

In September 2017 the European Commission launched a proposal to amend provisions regulating functioning of ESMA and the other ESAs with the aim of more strongly integrating European supervision to foster the Capital Markets Union and financial integration. Following adoption by the co-legislators, core elements for reforming the tasks, supervisory competences, governance structures, and financing of the ESAs and the ESRB came into force in January 2020, while ESMA’s new direct supervisory competences on critical benchmarks and data provision services took effect from January 2022.

As an integrated provider of financial services, Deutsche Börse Group comprises the whole range of financial markets infrastructure (FMI) operators, such as central counterparties, central securities depositories, securities settlement systems, and a trade repository. It also includes trading venues (regulated markets and multilateral trading facilities) and data reporting services providers.

The Group’s entire value chain is impacted by the ESAs’ work as the Group faces a wide range of different supervisors across the EU – European FMIs operate within a diverse supervisory framework. As such, we support developing a common supervisory culture and facilitating a single European financial market in order to ensure consistent and coherent financial supervision in the EU.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.

The Market Abuse Directive (MAD) and the Market Abuse Regulation (MAR) ensure the integrity and transparency of European financial markets and increase investor confidence through creating a level playing field for all economic operators in the Member States as part of the effort to combat market abuse. The concept of market abuse typically consists of insider dealing, unlawful disclosure of inside information, and market manipulation, all of which are prohibited.

MAD entered into force in April 2003, whilst MAR has been in application since July 2016. The Regulation is not limited in scope of application to financial instruments admitted to trading on a regulated market or for which a request for admission to trading on a regulated market has been made. It also covers financial instruments admitted to trading or traded on Multilateral Trading Facilities (MTFs), financial instruments traded on Organized Trading Facilities (OTFs), and emission allowances.

The framework strengthens the fight against market abuse across commodity and related derivative markets, explicitly bans the manipulation of benchmarks, such as LIBOR, and reinforces the investigative and sanctioning powers of regulators.

In October 2019, following a formal request from the European Commission, the European Securities and Markets Authority (ESMA) conducted a consultation on the functioning of MAR, covering a wide range of possible amendments to certain provisions of MAR. Following ESMA’s report, the Commission commenced the review process of MAR in 2022.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.

The Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) is an EU regulation designed to increase the transparency and stability of the European energy markets while combating insider trading and market manipulation. The main purpose behind REMIT is to outlaw market abuse in the wholesale gas and power market in Europe and it applies to all physical and financial trades where the supply is intended for the EU network. REMIT is part of the “third package” of rules that are intended to move the EU towards a single wholesale market through:

• defining market abuse including market manipulation, attempted market manipulation or insider trading,
• explicitly prohibiting market abuse,
• requiring effective and timely public disclosure of inside information by market participants,
• requiring firms to professionally arrange transactions to report suspicious transactions.

Anyone who executes a trade for delivery inside the EU – no matter where in the world they are based – is subject to the rules. In this sense, REMIT is distinct from many financial regulations. REMIT is enforced by National Regulatory Authorities (NRAs), who are usually energy regulators. For example, in Germany the Market Transparency Unit for Wholesale Electricity and Gas Markets, a joint institution by the Bundesnetzagentur, Germany’s regulator for electricity & gas, telecommunications, post and rail markets, and the Bundeskartellamt, Germany’s competition regulator, is responsible for executing REMIT. The entire effort is coordinated on an EU-wide basis by ACER, the Agency for the Cooperation of Energy Regulators.

REMIT entered into force in December 2011, with reporting requirements being applicable from 2015 on. Since 2015, all participants have to report information about their trading activity on Organized Market Places to ACER as well as outside Organized Market Places.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.  

The ECB has been considering a concept of European Issuance since 2017, where the ECB/Euro system could play an active role in setting up and running such a platform. In May 2019, a market consultation triggered the initiative on a European Distribution of Debt Instruments (EDDI), based on two components:

• The pre-issuance component considered setting up as a centralized auctioning tool for debt instruments that would have limited impact on the current competitive space for issuance; and
• The post-trade component considered to develop into a fully-fledged “issuer CSD” to issue EU government and potentially corporate debt from a “neutral” environment.

The ECB never fully released the consultation results, and with changes in the ECB governance the initiative lost momentum. Change in the ECB presidency and a clear and imminent need to support the post-pandemic EU recovery packages, the project received renewed interest.

A Debt Issuance Market Contact Group (DIMCG) was established in third quarter 2020 and a new survey to collect information and data relevant for assessing the risks, costs and potential inefficiencies in the debt issuance transaction chain was launched in December 2020.

Neutrality and costs are drivers of the ECB initiative, which bases its assessment on three main “pillars”:

• Pillar 1: Identification of EU debt issuance issues and opportunities.
• Pillar 2: Problem identification and standard setting/methodology.
• Pillar 3: Assessment of existing/emerging market solutions that could solve pillar 1 and 2.

The DIMCG issued its final report in December 2021 with recommendations for the way forward. In 2023, the Contact Group met for the last time before being dissolved to discuss the progress made by the industry in terms of the harmonisation of recommendations put forward by the DIMCG.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.

Financial market infrastructures (FMIs), in their role as Central Securities Depositories (CSDs) and Central Counterparties (CCPs), are required to be authorised as credit institutions in order to be able to provide certain services and as such are subject to certain Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD) requirements.

CCPs are often required to obtain a banking license to ensure access to overnight central bank facilities, which are essential to increase resilience and smooth operations. In contrast to this, CSDs need to be authorised as credit institutions to provide banking services that are ancillary to their main business such as the provision of cash accounts to, and accepting deposits from, participants in a securities settlement system and holders of securities account, primarily conducted to increase settlement efficiency. However, CSDs and CCPs are already embedded in a comprehensive regulatory regime specially tailored to them as FMIs, entailing strict risk management rules and additional prudential and capital requirements, as well as recovery and resolution rules (e.g., CSDR, EMIR, the Securities Finality Directive, the CCP Recovery and Resolution).

However, as the requirements in CRD IV/CRR also apply to CSDs and CCPs operating with a banking license, they are placed on equal regulatory footing with credit institutions, even though they only provide bank-like ancillary services to a very limited extent and, due to the distinct nature of their business model, do not pose any long-term risks like credit institutions do. Therefore, in order to ensure that CSDs and CCPs remain able to provide their services properly and thus strengthen the stability and integrity of financial markets, which also contributes to the objectives of the European Commission’s initiative on the Capital Markets Union, the unique characteristics of FMIs should be recognised by granting exemptions from prudential requirements designed for credit institutions as per CRD/CRR.

Against the background of the recognition of the specific business models of CSDs and CCPs, certain exemptions have already been granted. The EU rules deviate in some aspects from the Basel III standards to take those specific activities and pass-through models considered formally banking activities into account. As such, CCPs as well as CSDs maintaining a banking license were exempted from the Net Stable Funding Ratio (NSFR) on an individual basis, as they do not perform any significant maturity transformation. The distinct business model of CCPs and CSDs was moreover reflected in exemptions from the Leverage Ratio (LR): While CSD’s cash balances resulting from the provision of banking type ancillary services used solely for the purpose of settling transaction in securities settlement systems were excluded from the LR exposure measure as they do not create a risk of excessive leverage, CCPs were fully exempted from applying the LR requirements. To avoid potentially undermining the provision of central clearing services by institutions to clients, the initial margin on centrally cleared transactions conducted by institutions for their clients has been excluded from the total exposure measure as well.

The distinct business model and role of FMIs having a banking license was further considered in the field of recovery and resolution planning. Due to classifying as credit institutions CCPs and CSDs having a banking license were subject to the general requirements of the Bank Recovery and Resolution Directive (BRRD) rather tailored for “classic” lending banks than for FMIs. With the publication of a dedicated framework for recovery and resolution for CCPs (CCP R&R) existing shortcoming in the field of recovery and resolution were addressed through exempting CCPs having a banking license from the BRRD. Consequently, the Minimum Requirement for Own Funds and Eligible Liabilities (MREL) will no longer subject CCPs, which was considered potentially jeopardising the efficiency of central clearing. Instead, specific tailored requirements on pre-funded dedicated own resources will apply.

While the BRRD already early foresaw the possibility of separate recovery and resolution frameworks for CCPs and CSDs (see. Recital 12 BRRD) to ensure consistency, only a dedicated framework for CCPs was developed so far. Since the same logic behind granting this exemption to CCPs also applies to CSDs regardless of a banking license, they should also be covered by a dedicated R&R framework exempting CSDs with a banking license from the MREL requirement, particularly as CSDs are already as of today obliged under CSDR to hold sufficient capital ensuring an orderly winding-down or restructuring of the CSD’s activities.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.

On 31 January 2020, the United Kingdom (UK) left the European Union (EU). According to the withdrawal agreement, the 12-month transition period then began, during which the EU and UK negotiated the foundation of their future relationship and to conclude an EU-UK Trade and Cooperation Agreement.

The treaty came into force on 1 January 2021. While the agreement contains provisions including areas such as trade in goods and in services and cooperation on other aspects, the framework is limited in covering financial services. Instead, the EU and UK issued a Memorandum of Understanding to establish a framework for regulatory cooperation on financial services.

Consequently, financial services firms cannot benefit from previously used EU passport. Instead, market access will mainly be governed via the equivalence determinations and decisions. However, as equivalence decisions only exists for a limited amount of EU regulatory frameworks and can be unilaterally withdrawn on short notice, they are not a substitute for the current EU-passporting regime for market participants.

As EU rules ceased to apply in the UK, diverging regulatory frameworks may emerge in the future, which could affect the equivalence of both systems and therefore cross-border market access. Therefore, market participants should complete their long-term Brexit solution to avoid cliff-edge risks after the equivalence decision expires or will be withdrawn.

For Deutsche Börse Group, it is of utmost interest that UK-based clients continue to have access to our infrastructure. Therefore, our business units along our value chain are taking the appropriate measures in monitoring and analysing the post-Brexit environment very closely. At the same time, we provide support to our clients who plan to relocate their business to the EU. We have established a dedicated Brexit Transition Team to ensure member readiness.

In addition, with the Partnership Program of the central counterparty (CCP) Eurex Clearing, Deutsche Börse Group has developed a market-led alternative to the clearing of interest rate swaps within the EU. The programme was designed in close cooperation with market participants (such as trading firms, end customers and trading platforms).

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.  

With the proposal to introduce a Financial Transaction Tax (FTT) in 2011, the European Union once aimed at ensuring that the financial sector made its fair share to dealing with the consequences of the financial crisis of 2007/08. Although, Deutsche Börse Group understands this objective, it believes that this is already being achieved through other initiatives implemented over the past decade to promote financial market stability.

Moreover, according to many studies, the FTT does not bring the hoped-for gains, but instead brings unintended consequences and runs counter to many of the European Commission’s current key regulatory initiatives, including the Capital Markets Union (CMU).

Expected consequences include the relocation of business to other countries without an FTT to avoid taxation, which would weaken regulatory oversight and control as well as European Union’s competitiveness. Negative effects are also expected on private pensions and the real economy, as the tax would likely be borne by the retail investor – and this against the backdrop that retail investor participation is considered crucial for private sector wealth creation and is a key objective of the CMU. Similarly, the FTT may further discourage small and medium-sized enterprises (SMEs) from entering capital markets by creating additional tax burden at a time when supporting SMEs is actually at the heart of the European Commission’s policy initiatives.

Over the years, both the European Commission and the German government have repeatedly launched initiatives to introduce an FTT. In 2015, under the so called ‘enhanced cooperation’, ten Member States of the European Union, including Germany and France, announced that they had reached an agreement “in principle”. However, to this date, no legally binding agreement has been reached.

The Shareholders Rights Directive (SRD II) is aimed at tackling corporate governance shortcomings relating to listed companies and their boards, shareholders (institutional investors and asset managers), intermediaries and proxy advisors (e.g., firms providing services to shareholders, notably voting advice). The Directive made it easier for shareholders to use their existing rights over companies and likewise enhance those rights where necessary.

The SRD has been adopted in 2017 and transposed into national legislations & fully applicable since 2019. In 2023, the Commission requested EBA and ESMA to identify areas for further progress and detailed policy suggestions regarding the Directive’s effectiveness. The subsequent report prepared by EBA and ESMA will serve as basis for the upcoming work of the European Commission in assessing the implementation of the SRD II and for the potential review process of the SRD II.

Deutsche Börse Group welcomes solutions that ensure shareholders are more engaged, better hold the management of the company accountable, and act in the long-term interests of the company.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.