Unlocking Europe’s Capital Markets: Deutsche Boerse Group’s View on the MISP Proposal with Sujata Wirsching

As part of Deutsche Börse Group’s response to the German Federal Ministry of Finance (BMF) consultation on the EU Market Integration and Supervision Package (MISP), we spoke with Sujata Wirsching, Head of Government Relations Luxembourg and Lead Digital Finance, Group Regulatory Strategy at Deutsche Börse Group, to discuss the key messages and priorities outlined in DBG’s position. In this interview, she shares insights on the implications of the MISP proposal, the opportunities it presents for deeper market integration, and the areas where further refinement may be needed to ensure a balanced and effective regulatory framework.

Overall Positioning & Context

DBG has expressed support for the European Commission’s efforts to strengthen EU capital markets. From your perspective, what makes the MISP proposal an important step toward a more integrated and efficient European market?

The global order remains in flux, defined by economic volatility and geopolitical fragmentation. Disruptive structural tensions, significant fiscal constraints in the EU, and the structural underperformance of the EU capital markets weigh heavily on the growth prospects of EU companies, wealth and prosperity of private households, and innovation of Europe’s digital ecosystem. Pressure to accelerate the transformation of EU capital markets is mounting as market financing is not at par with its economic strength. In response to these significant geopolitical and economic challenges, the EU needs to intensify its efforts for a Savings and Investments Union (SIU) that asserts its strategic autonomy, restores its global competitiveness, and bolsters the international role of the Euro.

The Market Integration and Supervision Package (MISP) is a cornerstone of the SIU agenda, designed to deepen Europe’s capital markets and redirect savings toward productive investments. It aims to strengthen the financial infrastructure of European markets by integrating the single market for trading, clearing, and settlement, while also establishing a framework for emerging technologies like distributed ledger platforms. As the EU’s leading financial market infrastructure (FMI) provider with a unique, integrated business model, DBG is fully committed to supporting the efforts to harmonize and strengthen EU capital markets. We welcome the proposals by the EU Commission to make cross-border investments simpler, post-trading smoother, and innovation faster.

CSDR Reform & Role of ICSDs

DBG welcomes the introduction of “CSD hubs” and measures to promote further use of T2S. How could these changes strengthen the European posttrade ecosystem?

We welcome the proposed reforms of the CSDR, especially concerning "CSD hubs" and measures to promote greater use of the European Central Bank’s TARGET2-Securities (T2S) system. Through our post-trade infrastructure Clearstream, we have already created a structure with the dual CSD hub model that significantly simplifies cross-border investments. Via a single account, customers receive comprehensive connectivity to a network of 19 European CSDs and the single largest access point to the T2S. At the same time, our International Central Securities Depository (ICSD) serves the global markets outside the T2S environment.

This integrated model not only creates flexibility in settlement in central or commercial bank money, but also bundles liquidity in a single, large pool. DBG therefore strongly supports the “hubs and spoke” CSDs approach and measures that promote the use of T2S as means to foster more integrated post-trade landscape.

You highlight the need to consider international CSDs separately in the reform to avoid unintended disadvantages. What risks or market distortions could arise if ICSDs are not properly distinguished from domestic EU CSDs?

As ICSDs mainly serve global markets and non-euro-denominated products, they cannot guarantee access to central bank money accounts for all EU asset classes. To avoid unintended disadvantages and disruptions to orderly operations, ICSDs should be exempt from settlement in central bank money where neither practical nor possible.

Forcing the ICSD to operate under the same settlement rules as a T2S-native CSD would penalize its global business model. This would create a competitive disadvantage for a critical piece of Europe’s financial market infrastructure that connects the EU to the rest of the world.

The strength of the ICSD model lies in its flexibility to settle transactions in either central bank money or commercial bank money, depending on the currency, asset class, and client needs. This bundling of liquidity in a single, versatile pool is a major efficiency driver. A rigid mandate for central bank money settlement would destroy this flexibility, forcing a less efficient, more fragmented model that would ultimately increase costs for global investors.

Modernization & Innovation

DBG supports the Commission’s innovation-friendly agenda. Where is regulatory modernization most urgently needed to maintain international competitiveness?

DBG supports the innovation-friendly agenda of the EU Commission. The proposed inclusion of Distributed Ledger Technology (DLT) concepts and MiCAR e-money tokens in the CSDR and the proposed Settlement Finality Regulation (SFR), as well as the review of the DLT Pilot Regime (DLT PR) aimed at increasing its uptake and proportionality, are positive steps in the right direction.

Nonetheless, to unlock the full potential of DLT and the tokenization of financial instruments, the priority must be the modernization of core, crisis-proven regulatory frameworks (i.e., CSDR, MiFID, and EMIR), rather than containing innovation to a siloed,

parallel regime that adds to incoherence and further fragmentation of liquidity. The primary goal should be to permit all regulated entities to develop DLT-based services and utilize new forms of digital assets under the proven regulatory frameworks.

These changes are essential to empower FMIs to, on the one hand, tokenize financial instruments at scale, and, on the other hand, trade tokenize instruments unlocking the potential to bring a significant portion of the over EUR 75 trillion in assets currently held under custody in Europe onto the DLT.

Market Structure Reform (MiFID II / MiFIR)

You emphasize that an ambitious reform of MiFID II/MiFIR market structure rules is essential. What specific structural issues do you believe are most urgent to address to reduce liquidity fragmentation?

The recent “FIVE” initiative report1 noted the steady decline in the market share of primary (lit) venues to 30–31% in 2025 and explicitly recognized the need to consider additional measures to restore an effective level playing field between on-exchange and off-exchange trading. The current market structure proposals do not address the fundamental and growing imbalance in the European equity market structure. The rise of bilateral, less transparent trading models, especially Systematic Internalizers (SIs), at the expense of transparent multilateral trading venues, undermines the foundation of European capital markets. The MiFID II framework created an attractive regime for SIs, characterized by limited transparency, different pricing rules, and lighter regulatory oversight compared to public exchanges.

This imbalance starves public exchanges of liquidity, impairs the attractiveness of Europe as an IPO or listings destination and limits retail investors’ access to capital markets. An ambitious reform of the market structure under MiFID II/MiFIR is essential to counteract the increasing fragmentation of liquidity and ensure genuine transparency, fair competitive conditions between multilateral and bilateral trading, and a strengthened price formation.

The Market Integration and Supervision Package (MISP) proposes expanding the pre-trade data scope for the Consolidated Tape. What is Deutsche Börse Group’s view on this, and what approach would you recommend for the tape's future development?

Deutsche Börse Group welcomes the consolidated tape for equities and ETFs as an important contribution to the SIU, which will increase market transparency for all

investors. Giving retail investors free, real-time access to EU equity and ETF data substantially supports the SIU's goal of channeling more retail savings into the productive financing of EU companies. Having recently been selected as the provider of the equity CT (EuroCTP), we are committed to delivering an effective solution that truly benefits the EU ecosystem and broader market integrity.

Nonetheless, any potential further development of the CT should be based on a well-founded, data-driven, ex-ante impact assessment of the live tape. Introducing additional changes to the scope and design of the CT with the MISP, such as the proposed requirements for the 5 best bid and offer prices and the market identification code for pre-trade data, could exacerbate existing market structure weaknesses and increase latency arbitrage risks.

To avoid negative side effects for investors, issuers, primary markets, and trading venues alike, we propose to allow for the implementation of the Consolidated Tape to take full effect and gather sufficient data and experience before introducing new, complex requirements. Retaining the current data scope for the Equity CT unchanged preserves proportionality, protects price formation on lit venues, and ensures the timely, stable implementation of the equity consolidated tape. A thorough, evidence-based assessment of the live tape's impact is essential to ensure that any subsequent adjustments are built upon a solid and proven foundation, thereby safeguarding market stability and preventing the introduction of unintended risks.

Choice of Settlement Location

DBG supports giving market participants choice in settlement location, but expresses concern about an unrestricted right of designation. What risks could arise if this element of the proposal remains unchanged?

DBG supports enabling market participants to choose a settlement location and has taken concrete steps to increase choice. For instance, the Eurex Home Market Settlement initiative is improving settlement efficiency of market participants. Nevertheless, , we caution against compromising the foundational objective of Financial Market Infrastructures to safeguard financial stability and orderly functioning of the markets. The proposed unconditional right to designate a settlement location contradicts this objective, as it would:

· Undermine the Stability Mandate of FMIs: An obligation for trading venues to connect with any CSD overrides their own critical risk management and due diligence processes. This directly undermines the core mission of FMIs to ensure financial stability.

· Endanger Settlement Finality: The forced connection across multiple jurisdictions and regulatory frameworks creates legal uncertainty and thus weakens settlement finality – the point at which a transaction is considered complete and irreversible.

· Increase costs for investors: The establishment and maintenance of numerous new technical and legal connections leads to enormous operational complexity and inefficiency. The resulting cost increases for clients and end-investors would make regulated markets unnecessarily expensive.

· Harm investor protection and increase systemic risk: A shift towards bilateral trading would lead to less transparency and higher rates of settlement fails.

· Incentivize shift to less transparent markets: Since the proposed Article 34c MiFIR only applies to trading venues and not to bilateral execution channels, it creates an uneven playing field. This could steer trading activity away from transparent, regulated trading venues into less regulated bilateral arrangements, which would be a direct contradiction to the goals of MiFIR.

DBG therefore proposes to establish a risk-sensitive process for the designation of a settlement location promote greater integration and choice in European post-trade landscape without compromising its security and stability.

Open Access & CCP Interoperability

The proposal excludes exchange traded derivatives from MiFIR’s Open Access regime, which DBG welcomes. Why is this exclusion important for market integrity?

The exclusion of exchange-traded derivatives (ETDs) from the MiFIR Open Access regime is crucial because, unlike equities, the ETD market is defined by an inseparable link between trading and clearing when it comes to innovation, position management, and risk management. This integrated model, where trading and clearing are tightly coupled within a single framework, is the global standard for ensuring the integrity and resilience of these uniquely complex instruments. Forcing these functions apart would not only fragment liquidity and increase costs for end clients but would fundamentally break a market structure that is deliberately designed for stability. While choice is valuable, it must not come at the expense of market safety or create undue inefficiencies.

Furthermore, Open Access mandate for derivatives would inevitably lead to interoperability between Central Counterparties (CCPs), creating unacceptable systemic risks. Such links would establish direct contagion channels between systemically important financial infrastructures, transforming CCPs from firewalls into potential amplifiers of market stress. Interoperability for complex derivatives complicates risk management, introduces challenges in default scenarios, and ultimately weakens the very stability that CCPs are designed to protect. The current integrated structure is therefore not an anti-competitive barrier but a vital and deliberate safeguard for market integrity.

DBG has serious concerns about expanding CCP interoperability for OTC derivatives. What systemic risks or contagion channels could this introduce?

The same concerns we expressed for interoperability for ETD derivatives equally apply to OTC derivatives. Moreover, there has been no significant market demand for interoperability in derivatives to date. In fact, the only existing link was terminated in 2019 because the expected benefits failed to materialize and the unresolved risks outweighed potential benefits from the perspective of the local authorities. DBG therefore believes that the CCP interoperability regime should be limited to cash markets, as had previously been the case. Furthermore, while we support open access where it adds value – such as in cash equities and repo markets; an access request should not lead to forced interoperability in any case.

Looking ahead, what would a fully integrated, efficient, and globally competitive EU capital market look like from DBG’s perspective?

From our perspective, a fully integrated, efficient, and globally competitive EU capital market would be a dynamic ecosystem built on transparency, liquidity, and innovation. It would be a market where deep, concentrated liquidity on transparent multilateral venues ensures robust price discovery, making the EU the premier destination for companies to launch IPOs and fund their growth. A vibrant secondary market, in turn, would empower the Savings and Investment Union by allowing retail and institutional investors to confidently channel capital into the real economy. This entire structure is underpinned by a seamless and resilient post-trade landscape, where harmonized rules and interconnected infrastructures like CSD hubs eliminate cross-border friction, making investing across the Union as simple as investing domestically.

Financial Market Infrastructures would operate on a level playing field, leveraging DLT to offer on-chain settlement and dynamic collateral management, supported by a full range of digital cash from tokenized commercial bank money to a wholesale CBDC. By modernizing our foundational regulations to be technology-agnostic and forward-looking, Europe can unleash its full innovative potential, creating a truly single digital market that is not only resilient but stands as a global leader in the future of finance.

As the EU’s leading financial market infrastructure provider, Deutsche Börse Group stands ready to leverage its unique, integrated business model to deliver the resilient and scalable solutions required to turn this vision into a reality.