The World Federation of Exchanges has published its response to the European Securities and Markets Authority consultation on the structure of European equity markets, urging ESMA to examine how rising bilateral trading is affecting market functioning. It argues that transparent multilateral markets remain the main source of price discovery, while bilateral trading depends on prices formed on lit public markets, creating a risk that continued growth in off-book activity could reduce the share of trading that directly contributes to price formation. The response says ESMA’s analysis is incomplete without data on UK trading in EEA shares, particularly for systematic internalisers, over-the-counter trading and other off-book activity. It also disputes ESMA’s current concept of “addressable” liquidity, arguing that some liquidity is only available to certain participants, unlike multilateral venues that offer fair and non-discriminatory access. The WFE further defends closing auctions as an efficient way to execute large trades and as an important benchmark mechanism for European asset managers that use closing prices for valuation, portfolio rebalancing and index tracking. The federation calls for further analysis of bilateral trading’s effect on price discovery and for greater transparency around systematic internalisers before any further market structure changes are considered.
World Federation of Exchanges2026-07-02
World Federation of Exchanges urges ESMA to address growth in bilateral trading in European shares
The World Federation of Exchanges has urged the European Securities and Markets Authority to examine the impact of growing bilateral trading in European shares on price discovery and market quality. In its response to ESMA’s market structure consultation, it says the analysis is incomplete without UK trading data in EEA shares and calls for greater transparency around systematic internalisers. It also argues that multilateral venues remain central to price formation and that closing auctions play an important role in efficient execution.