The morning is about to kick off here at TradeTech, which traditionally begins with two panels discussing various aspects of market structure.

At 8:30 am, the focus will be on the primary issuance market, examining how Europe can enhance its competitiveness for IPOs and expand EU capital markets. This will be swiftly  followed by the 9:00 panel addressing the secondary market, titled “Market Structure Reform.”

It is noteworthy that both panels lack representation from policymakers or regulators, which is surprising given that any changes in these areas are likely to be driven by these groups.

What to expect

Discussions are expected to include the European Commission's efforts toward deeper market integration under the “Savings and Investment Union,” with an ongoing consultation paper on the integration of EU capital markets, closing on 10th June 2025. Among the topics for discussion in this consultation is the proposal of a Reg NMS-style framework for Europe.

Regulatory simplification and harmonisation, long requested by industry participants, is one of the key themes of this consultation. However, achieving this amidst the continuous stream of planned changes poses significant challenges.

Additionally, the topic of the Consolidated Tape is expected to be mentioned. There appears to be an emerging industry consensus that this will be implemented, with timelines being circulated for both the EU and UK. However, some details remain unresolved - particularly in the UK, where the debate over Pre and Post vs. Post trade only continues.

A question to think on

Without political intervention to promote and incentivise retail investing, how do regulators anticipate that changes to secondary markets will increase traded volume?

The panels are only just starting to heat up here in Paris, and one in particular caught my eye - the Liquidity & Transparency panel.
So whilst you're perhaps enjoying the first (or second) coffee of the day, here's a rundown.

What's going on

European equity markets remain fragmented, making it difficult for participants to access a full picture of liquidity and volumes beyond lit markets. Efforts are underway to define and report non-displayed liquidity more consistently, particularly in systematic internalisers. Standardised trade reporting, clearer classification of execution types, and more robust post-trade flags are being explored to improve visibility into these non-transparent flows.

A European consolidated tape is seen as a key solution to the transparency gap, but its success depends on mandatory, high-quality data contributions from all trading venues. The current MiFID II post-trade transparency regime needs reform to capture the full scope of equity trading. This could be done by tightening deferral rules, harmonising reporting standards, and ensuring complete inclusion of off-exchange activity.

Why it matters

A consolidated tape in Europe will allow investors to understand a clearer picture of the overall liquidity available in the market. As bilateral liquidity reported as SI or off-book on-exchange continues to grow, its market share is now significant and cannot be ignored. This flow does not contribute to price discovery and causes both an increase in price volatility and a reduction in liquidity levels across traditional trading venues.

In our latest Liquidity Landscape report, we mark the proliferation of negotiated bilateral liquidity, and a general change in perception towards trading against SI market-makers, meaning the methods by which total liquidity is assessed may need to be revisited.

OTC market share increased over 71%, off-book on-exchange and benchmark trading, rising from 21% in January 2021 to 36% in January 2025*. This growth has been primarily driven by a sharp rise in off-book on-exchange activity, which has nearly doubled its share over the period. This additional flow raises the average daily traded notional in March 2025 from €71B shown in the graph below, to over €111B.

*Source: BMLL and Liquidnet Internal - January 2021 – March 2025

Something to think on

• Should I interact with SI liquidity?

• Which SI can I trust?

• How could I assess SI, and how should I interact with it? 

We're heading into the afternoon sessions, now you might be feeling a little drowsy after a traditional Parisian-style lunch, so we will break down some thoughts for those of you going into the Cross Asset Infrastructure Panel.  

What’s going on

The adoption of multi-asset trading is increasing on buy-side dealing desks. A big challenge for Desk Heads and COOs is how to harness technology to ensure that there is access to all possible liquidity options, and to improve low-touch workflows, which are less labour-intensive.

Why it matters

Best execution relies upon, among other factors, achieving the best results based on price, cost and speed of trading. The correct infrastructure is essential for this. Different asset classes often require multiple trading systems, and this can become inefficient, inhibiting a dealer’s ability to execute successfully.

Desks are also consolidating and reducing in size, needing to do more with fewer resources. Building the best technology options can increase the effectiveness of a desk and lead to improvements in trading costs. Another consideration is TCA, which needs to be measured for each asset class, but this can be difficult if systems are not aligned.

Questions to ask

1. Do you have a cross asset EMS or are you using multiple systems to execute across different products?

2. Do you think the high resource and technology costs involved in the electronification of trading for every asset class you trade are worth it, or can a more high-touch and manual model also work?

As we step into the afternoon sessions here in Paris, it’s a great moment to pause, reset, and refocus. We’d like to share a few thoughts to help set the stage for those of you heading into the equity derivatives market structure panel.

What’s going on

European equity derivatives markets continue to lag behind the U.S. in growth, liquidity, and retail participation. In 2024, the U.S. market for exchange-listed equity option contracts recorded yet another year of record-breaking trading volumes.

This disparity is largely driven by Europe's fragmented market structure, siloed clearing models, and limited retail investor education, all of which contribute to a more complex and costly trading environment. By contrast, the U.S. benefits from centralised clearing, consolidated trading venues, and a well-developed retail ecosystem, which together fuel higher volumes and ongoing product innovation.

Here's a comparative view of how the two markets currently diverge. 

Why it matters

This siloed liquidity in Europe leads to overall more siloed liquidity globally, as the US now accounts for more than 70% of the MSCI World Index*. 

From a European perspective, improving equity derivatives trading is essential to enhance the region's financial competitiveness, deepen market liquidity, and support broader capital markets integration across Europe, not just within the EU.

A more efficient and accessible equity derivatives market can help European institutional and retail investors better manage risk, hedge exposures, and gain market access through cost-effective instruments. It also allows for more transparent price discovery and can drive innovation in financial products, including ESG and sector-specific derivatives.

Further development of global financial markets should and needs to be accompanied by more diversification of market structure and flow.

* source: www.msci.com/indexes/group/developed-markets-indexes 

Questions to ask

1. How can we, as members of the financial community, play our part to help promote financial education in Europe?

2. What concrete steps are European players taking to remove investor barriers in fragmented markets?