ESMA Launches a Call for Evidence on the Structure of European Equity Markets

Why It Matters

The consultation will shape forthcoming EU market‑structure rules, affecting liquidity provision, transparency obligations and the competitive landscape for brokers and exchanges across Europe.

Key Takeaways

• Addressable liquidity steadied at ~85% of total volume (2022‑2025)
• On‑book trading held 75‑80% share, showing market stability
• Lit continuous trading fell, offset by more closing and batch auctions
• Systematic internaliser activity rose, prompting transparency rule review
• ESMA seeks stakeholder input on addressable liquidity definition by 30 June

Pulse Analysis

ESMA’s latest Call for Evidence reflects a broader regulatory push to fine‑tune the European equity market after years of rapid technological change. By leveraging MiFIR transaction reporting, the regulator has built a data‑driven picture of trading flows from 2022 to 2025, highlighting that while overall liquidity remains robust, the mix of trading venues is shifting. The decline in lit continuous trading—once the backbone of price discovery—signals that market participants are gravitating toward mechanisms that offer greater execution certainty, such as closing auctions and batch auctions, as well as the growing role of systematic internalisers.

The findings carry weight for both issuers and intermediaries. Stable addressable liquidity at roughly 85% suggests that the market can still absorb sizable order flow without excessive price impact, reassuring investors. However, the rise in SI activity and alternative auction formats raises questions about post‑trade transparency and the adequacy of existing reporting frameworks. ESMA’s focus on the RTS 1 addressable‑liquidity definition and the post‑trade transparency flagging system indicates a willingness to adapt rules to reflect these evolving dynamics, potentially leading to tighter disclosure requirements for SIs and new benchmarks for auction‑derived pricing.

Stakeholder input will be pivotal as ESMA prepares to adjust the regulatory landscape ahead of the single‑volume cap and enhanced SI transparency obligations already slated under MiFIR. Market participants—exchanges, broker‑dealers, and asset managers—must weigh the trade‑off between flexibility in execution and the cost of compliance with any new transparency mandates. The feedback deadline of 30 June 2026 offers a narrow window for industry voices to influence policy, making this consultation a critical juncture for the future architecture of European equity trading.