The The World Federation of Exchanges (WFE), the global industry association for exchanges and clearing houses, has published a response to the European Commission’s (EC) consultation on the Savings and Investment Union (SIU). The WFE commends the simplification and burden reduction objectives, but urges the EC to shift its focus from structural supervision reforms towards more impactful, growth-oriented initiatives.

The WFE cautions that the creation of a single supervisory authority will not, in itself, generate economic growth or meaningfully attract investment to European capital markets. 

Instead, the EC should prioritise:

• Tax Regime Reform: The introduction of tax-advantaged investment accounts is a strong start, but deeper reforms are essential. These include eliminating transaction taxes, reducing listing costs, and addressing the persistent debt-equity bias that discourages equity financing. Such changes would directly enhance investor participation and channel capital into productive sectors of the economy.
• Support for Investors: Empowering retail and institutional investors with access to risk management tools, such as regulated derivatives, and reducing paternalistic barriers to market entry are essential. A balanced approach to investor protection that includes financial literacy and experience - not just regulation - is vital for long-term financial resilience.
• Proportional, Principles-Based Regulation: The WFE continues to advocate for a shift from prescriptive, rules-based legislation to principles-based regulation that allows for a degree of divergence in how firms achieve compliance which would be a result of different and more innovative approaches to the same problem. Excessive regulatory burdens, such as those proposed under EMIR 3.0 and DORA, threaten to stifle innovation and delay much-needed advancements in post-trade infrastructure.
• Market-Led Consolidation: Any efforts to consolidate financial market infrastructure should be driven by market dynamics, not regulatory mandates, allowing efficiencies and synergies to emerge organically. Consolidation should enhance competitiveness, not undermine national expertise or create unnecessary supervisory overlaps.
• Bilateral Venues: A primary focus should be on ensuring that the internalisation of order flow is properly contributing to beneficial market dynamics. In particular, as liquidity is siphoned off exchanges, which are open to all market participants who wish to trade, into bilateral trading venues, the Commission should consider how this affects liquidity and best execution. This is not just important for investors, but it impacts market quality criteria that issuers consider before listing. 

Nandini Sukumar, CEO of the WFE, said, “We welcome the ambition of the Savings and Investment Union; and call for ambition to be aligned with economic reality. Real growth will come from removing barriers and giving investors the tools, incentives, and confidence to participate fully in European markets. The Single Supervisory Mechanism for banks is not something to emulate, such centralisation has not propelled EU banks into global leadership positions by market capitalisation. The EU should focus on actionable, high-impact areas such as tax incentives and investor empowerment to further growth.”

Richard Metcalfe, Head of Regulatory Affairs at the WFE, said, “We are increasingly concerned about the growing trend toward internalisation of order flow in Europe. The U.S. experience demonstrates that internalisation fragments markets and undermines price discovery - exactly what the EU is trying to prevent. Exchanges provide transparent, lit markets with equal access and robust investor protections. These essential benefits, and the clear distinction from opaque bilateral trading, must be recognised and preserved.”

Read the full response here.