The Association for Financial Markets in Europe (AFME) has today published its inaugural Distributed Ledger Technology (DLT) Capital Market report, analysing the size and growth of the global market in DLT issuance and related secondary market activities. The report, which will be published on a semi-annual basis, aims to bridge a data gap by offering timely insights into the evolution of the global DLT-based capital market activities and provides a comprehensive overview of the primary DLT fixed income market, secondary markets and valuations, repo transactions, as well as an overview of the size of the tokenised fund industry and that of other tokenised asset markets. Key findings: In 2024, €3bn of fixed income instruments were issued globally with the use of DLT, a 260% increase from €848mn issued in 2023, but still sub-scale considering the total size of fixed income markets. Issuers based in Europe and Asia led by issued amount in 2024, originating €1.7bn and €1.1bn, respectively. The issuance in Europe was strongly led by the DLT trials undertaken by the European Central Bank (ECB) and the Swiss National Bank (SNB), accumulating jointly a total of €1.8bn in 2024 (the Central Bank trials included issuance by European and US-based entities). A total of €483mn was issued in the form of green DLT bonds, representing 16% of the global DLT fixed income amount issued in 2024. Julio Suarez, Head of Research at AFME, said: “We are very pleased to add our DLT Capital Market Report to our stable of regular data reports we publish to help support and advance wholesale capital markets in Europe. Although the adoption of DLT in capital markets is currently limited relative to the size of the global market, its recent rapid growth and the emergence of new market participants and product offerings present substantial opportunities for future expansion. “Undoubtedly, the DLT-based issuance of securities will continue to grow over time, and we are pleased to be the first association in Europe to regularly produce data on this growing asset class.” – Ends –

Rising data fees to offset declining trading revenue burden market participants with surging costs London, UK – 04 February 2025 – Research by Market Structure Partners (MSP) reveals that European stock exchanges are increasingly turning to market data sales to compensate for adverse market conditions that should have resulted in a downturn in equity market revenues such as declining equity trading volumes, shrinking market share, and a diminishing customer base. This shift has dramatically driven up the cost of equity market data, which is essential for issuers, investors, and market intermediaries to conduct their daily business. The research, commissioned by a coalition of trade and other industry associations, presents a critical analysis of how the equity market data business and fee structures of Europe’s largest exchanges (Deutsche Börse, Euronext, LSEG, Nasdaq Nordics and SIX Swiss Exchange Ltd) have evolved and how it stifles growth and innovation. Niki Beattie, CEO of MSP said “This Study shows the ease with which exchanges can rely on market data income to supplement what should otherwise be a natural decline in revenue and suggests that, as a result, market growth has become a secondary objective.European policymakers with competitiveness and innovation agendas should rigorously challenge the current separation of trading and data revenues at all trading venues.” Total equity market revenues consist of trading revenue and market data revenue combined. However, the market data pricing does not appear to align with the trading activity it underpins. Despite these adverse conditions, EU regulatory disclosures from Europe’s largest exchanges show that they appear able to sustain overall equity market revenues by increasing the portion that they generate from market data as trading revenues decrease. For example: Transacted value on Euronext’s equity markets reduced by 17% between 2020 and 2023. However, the total equity market revenue only declined by 0.5%. This is because market data revenues as a proportion of overall revenue increased from 11% to 19%. Transacted value on at Deutsche Börse’s equity markets reduced by 29% between 2020 and 2023. However, equity market revenue only declined 12%. This is because market data revenues as a proportion of overall revenue increased from 21% to 31%. Transacted value on Nasdaq Nordics’ equity markets reduced by 26.9% between 2021 and 2023. However, the total equity market revenue only declined by 8.8%. This is because market data revenues increased from 19% to 23%. LSEG only has to make regulatory disclosures for its EU subsidiary, Turquoise. Trading turnover on Turquoise significantly reduced between 2020 and 2022, some of which can be attributed to its sale of Borsa Italiana in 2021. Nevertheless, during the same period, market data as a percentage of overall equity revenue rose from 10.5% to 27%. These increases in market data revenue have occurred even though there are no specific costs for producing market data and the costs of running a trading platform, such as software, hardware, energy prices and other factors are stable or declining. Additionally, exchanges in the UK and Europe have run the same trading technology for more than a decade and there is no evidence of any significant expenditure in their accounts. Costs for disseminating data across the market are borne by third parties. The research argues that, exchanges have managed to maintain revenues by charging higher prices to fewer participants for more limited data.b This appears to have been achieved through the introduction of arbitrary and complex fee structures that are based on multiple factors including: user type (broker/agent), competitive status, professional versus retail users, data consumption method (human use on display terminals versus machine use of non-display data), and number of devices that may be able to see the data. Restrictive clauses also limit data use to exchanges' predefined purposes, making it hard for innovators to use data without taking on indeterminate financial risk. As a result, every firm and user has a different cost profile and, if an exchange lowers prices for one set of customers, it may offset the revenue loss by raising prices for other customers. The pricing model has led to extraordinary price increases, particularly as exchanges appear to seek to stem losses that arise that result from their customers’ increasing automation. Most dramatically, under certain conditions, it is now 35 to 97 times more expensive in 2024 for a machine to use data compared to the cost for a human to use the same data for the same activities in 2017. Additionally, according to the research, firms that compete with traditional stock exchanges, either as trading venues or index providers are amongst those that have seen the most dramatic price increases. Competing trading platforms have seen costs rise by up to 481% between 2017 and 2024, while proprietary index creators that compete with exchange owned indices experienced cost rises between 97% and 170% across three exchanges over the same period. Since the introduction of MiFID I in 2007, these exchanges have collectively earned at least £5.67 billion from market data, justifying their pricing as essential for the maintenance of fair and orderly markets but other competing trading venues have managed to become profitable and process similar volumes in a fair and orderly manner without the same reliance on market data revenues. If market data costs were directly correlated to market share, the study finds that exchanges, leveraging their incumbent status, could have generated up to £4.93 billion (€5.83 billion) in surplus revenue from market data fees since 2008. Alternatively, they could be earning up to 7.64 times more than competitors for processing similar volumes and market share. The research raises critical questions about exchanges' role in regulated markets including: whether they are truly serving the equity market community, whether they are investing in equity market development and whether regulation has kept pace with the evolving business models and interests of exchanges where equity markets are now a minority business. Ultimately, the Study argues that market data's value must align directly with trading activity. It calls for regulation to ensure data is treated as a by-product of trading by all trading venues rather than a separate revenue stream. Failing that, legislative intervention should redefine all trading venues’ objectives to ensure they support market growth as their primary objective explicitly. Once the transparency of exchange data fees is improved, it will be easier to understand the pricing of data dissemination imposed by third party data vendors within the value chain. "This study reveals a concerning trend in European equity markets," said Mike Bellaro, CEO of Plato Partnership. "When essential market data becomes disproportionately expensive, it creates barriers to entry and stifles the very innovation that policymakers are trying to encourage. This is particularly relevant as the UK and European Union seek to enhance their market competitiveness." Adam Farkas, CEO of AFME, said: “Accessible market data is a critical component of healthy and well-functioning capital markets. Irrespective of the asset class, data empowers and allows all market participants to make informed decisions when allocating capital which in turn, supports a competitive and growing capital market. We thank Market Structure Partners for undertaking this critical research which shows that the much-needed growth in Europe may be undermined if attention is not paid to these concerning developments”. Thomas Richter, CEO of the German Investment Funds Association, BVI, said: “Asset managersare legally forced to usestockmarketprices, benchmarks, credit ratings, and other datafrom third-party providers.Because of the existing oligopolymarket structures with only a few providers per segment, there is a case for competition law authorities.We call for an EU data vendor act that regulates the commercial behaviour of these entities.Because if we don't, the already considerable cost pressure in thefundindustry will intensify even further – also to the disadvantage of the consumers.” Tanguy van de Werve, Director General of EFAMA, said:“Competitiveness is high on the policy agenda, including boosting the competitiveness of EU capital markets. Addressing the harmful impact of the oligopoly at the heart of market data access would lower trading costs, encourage new market entrants, and promote innovation. EU capital markets are underperforming their global peers, a trend that has only solidified over the last few years. Tackling high market data costs should be an obvious choice for policymakers looking to reinvigorate European capital markets.” Piebe Teeboom, Secretary General of the FIA EPTA said, “The MSP report evidences the ongoing increase in the cost of market data over recent years. This adds significant cost to participating in European financial markets, at a time when Europe is focussed on finding ways of boosting growth and competitiveness. In the interests of ensuring Europe remains an attractive destination for capital allocation, we encourage policy-makers and regulators to consider how the report’s findings impact these objectives.” -ENDS-

Today the European Securities and Markets Authorities (ESMA) hosted the T+1 Governance Launch Meeting to present the arrangements for driving the move to the reduction of default settlement cycles to T+1 for EU securities markets. The reduction of the settlement cycle for securities transactions can help reduce counterparty credit risks, improve market efficiency, and address issues arising from the current lack of alignment between the settlement cycles of Europe and other major global markets, which creates costs and inefficiencies for investors, issuers, intermediaries, and market infrastructures. Aware of the benefits and costs that this transition entails, members of the Industry Committee have welcomed the ESMA report, which identified a pathway and also suggested a date for the transition to the T+1 settlement cycle. In line with the recommendations of that report, and in coordination with the public authorities, the industry has established an appropriate governance framework to guide the transition process with the aim of moving to T+1 in a manner and timing also coordinated with the UK and Swiss markets. At the meeting on January 22 organised by ESMA, the independent chair of the T+1 Industry Committee, Giovanni Sabatini, presented the Terms of Reference for the T+1 Industry Committee, the committee's composition, and the organisation of work across the various identified Technical Workstreams, along with an initial draft of the work plan. The principles underpinning the composition of the committee and its activities are representativeness, inclusivity, transparency, consensus-seeking, and efficiency. In this regard, the committee's work may build upon the work already completed by the European industry in the October 2024 report, as well as the ESMA report and the UK recommendations, US Playbook, and upcoming Swiss report, when relevant. The Chair of the Industry Committee, Giovanni Sabatini, commented: “The T+1 project is a collective effort of the financial industry based on good faith and credibility. Establishing a robust, balanced, and inclusive governance framework is key to ensuring broad acceptance and support while avoiding overcomplexity. A coordinated move to T+1 will support the efficiency, liquidity, and competitiveness of EU financial markets. Constructive, transparent, and continuous cooperation with European Authorities will be key to ensuring the success of the project.”

The Association for Financial Markets in Europe (AFME) is pleased to announce the appointment of April Day as Head of Capital Markets. Ms. Day brings a wealth of experience in investment banking and capital markets to her new role. During her 12 years at AFME, she previously served as AFME's Head of Equities, overseeing Equity Capital Markets (ECM), trading, and post-trade activities. Her career includes senior roles at Dresdner Kleinwort and Panmure Gordon as Director of Equity Sales. Ms. Day holds an LLB (Hons) in Business Law and a Legal Practice Certificate from the Oxford Institute of Legal Practice. Ms. Day succeeds Rick Watson, who announced his retirement in July, after 18 years of service with AFME. AFME’s CEO, Adam Farkas, said, “We are delighted to appoint April as our new Head of Capital Markets. Her market insights and deep understanding of the industry make her the ideal candidate for this role. At AFME, we are committed to nurturing and supporting talent, and April’s appointment underscores this focus. April’s leadership and vision will undoubtedly strengthen our efforts to advance Europe’s capital markets and support our members in navigating the challenges and opportunities ahead.” – Ends –

The Association for Financial Markets in Europe (AFME) has today announced that Juan Blasco, Global Head of Institutional Business at BBVA, has been appointed as Chair of the Board. He assumes the role from Thalia Chryssikou who was previously a member of the AFME Board and served as Chair between June 2021 and July 2024. Adam Farkas, AFME Chief Executive, said: “We are delighted to welcome Juan as AFME’s new Chair. Since joining the Board in 2020, Juan has brought invaluable insight and perspective to AFME and its members. His wealth of knowledge and experience from his over 20-year career in financial services equips him to lead the AFME Board as we work to ensure Europe’s capital markets can play its role in allowing Europe to regain its competitive edge and secure long-term economic prosperity.” “I would also like to take this opportunity to thank Thalia for her service and dedication to AFME. Under Thalia’s Chairmanship, AFME continued to advance its reach and reputation as an expert and credible voice for Europe's wholesale financial markets across a broad range of regulatory and capital markets issues. She has been a very energetic and committed Chair; she remains a friend of AFME’s and we wish her well in her future endeavours.” Juan Blasco, said: "I am deeply honoured to assume the role of Chair at AFME and excited to build on its impactful work. As we navigate an evolving global landscape, Europe’s ability to foster efficient and integrated capital markets is key to enhancing global competitiveness. This requires continued collaboration and coordination between the EU and the UK to ensure that companies and investors are empowered to drive sustainable economic growth. I look forward to working closely with our members to advance capital markets that effectively serve businesses, investors, and communities." – Ends –

A consortium of leading trade associations (the “Trade Associations”) welcomes the opportunity to respond to the consultation of the European Commission (“EC”) on the functioning of the EU Securitisation Framework (the “Framework”). The Trade Associations support the efforts of the EC to review and address holistically the different elements of the Framework which hinder market growth. This initiative is a very important and welcome step at a pivotal moment given the important role securitisation can play in contributing to the realisation of the Savings and Investments Union and vibrant European capital markets supporting the growth and competitiveness of the EU economy. The regulatory and prudential challenges lie both on the demand and the supply side and, therefore, no single reform can ever provide an effective solution to the revival of the EU securitisation market. On the contrary, multiple, synchronised and targeted reforms are urgently needed to address the current regulatory impediments. These reforms include: Reform to Solvency II capital calibrations Reform to Article 5 due diligence requirements Adjustments to bank capital calculations for Internal Model and Standard Model banks Adjustments to LCR eligibility criteria and haircuts for securitisation for HQLA purposes Reform to Article 7 disclosure requirements Simplification of STS criteria – Ends –

The Association for Financial Markets in Europe (“AFME”) welcomes the opportunity to respond to the consultation by the European Commission (“EC”) on the functioning of the EU Securitisation Framework (the “Framework”). AFME is supportive of the efforts by the European Commission to consider holistically and review the different factors which are preventing the revival of the securitisation market and, as a result, hindering broader economic growth in the EU. AFME believes that every single segment of the securitisation market can offer valuable contributions to the Savings and Investment Union and the broader CMU objectives. Traditional and synthetic securitisations of mortgages, SME loans, corporate exposures and other asset classes have the potential to finance the real economy on a greater scale. The SRT market has also experienced significant growth in recent years and can further contribute to the deepening of EU capital markets, while private cash securitisations (both ABCP and non-ABCP) can provide important additional lines of credit to businesses across Europe. Given the potential of securitisation to improve the competitiveness of the European economy, AFME believes that the regulatory framework for securitisation needs to evolve to become more proportionate and risk-sensitive. Adam Farkas, CEO of AFME, said: “We are grateful for the opportunity to share our views and recommendations on what is needed to revive the securitisation market in the EU. We welcome the European Commission’s efforts to review the current Securitisation Framework and ensure it is fit for purpose and able to support the broader growth and competitiveness objectives laid out by the new EU Commission.” Shaun Baddeley, Head of Securitisation at AFME, said: “EU leaders have rightly acknowledged the value of securitisation and called for relaunching the European securitisation market, including through regulatory and prudential changes. The lacklustre securitisation market of the past decade can indeed, at least in part, be attributed to regulatory overcorrection, due to which, the EU is currently lacking the ability to deploy this financing technique at scale. More specifically, the combined effect of certain provisions within the EU Securitisation Regulation as well as in the EU Bank and Insurance Prudential Capital Frameworks have disincentivised EU investors and limited the utility of the product as a funding and risk transfer tool.” Following the submission of the AFME response to the EC consultation yesterday and the publication of AFME’s position paper ‘EU Securitisation back on track’ in June, AFME looks forward to continuing its engagement with the European Commission and other stakeholders as discussions evolve and progress. – Ends –

Overview This statement is supported by the following financial markets Trades Associations (“the Associations”) on behalf of their members active in the EU bond markets, including sell side, buy side, and financial market infrastructures: the Association for Financial Markets in Europe (AFME), BVI (German Investment Funds Association), Bundesverband der Wertpapierfirmen (bwf), the European Fund and Asset Management Association (EFAMA) and the International Capital Markets Association (ICMA). As ESMA’s review of EU’s post-trade transparency for bonds enters its final stages the undersigned Associations strongly reiterate the importance of the incorporation of credit ratings in underpinning the success of the EU post-trade transparency framework for corporate bonds. Distinguishing between investment grade (IG) and high-yield (HY) corporate bonds is an essential element that provides for greater transparency in more liquid bonds whilst balancing the need to provide protection for those bonds where overly prompt dissemination of trade information has the ability to negatively impact market liquidity. Other sophisticated bond markets also calibrate transparency for corporate bonds according to the credit rating of the issuer. Not adopting a similar methodology would put EU corporate bond markets at a disadvantage globally. The associations therefore urge policy makers to ensure that the European Union will remain competitive in the global fixed income markets, preserving and potentially expanding existing liquidity in EU bond markets, which in turn will continue to ensure issuers can finance their investment needs in the most effective way. It is clear that there are precedents for using credit ratings, not just across jurisdictions but also under other EU regulations. Use of credit ratings for the calibration of transparency for corporate bonds Why the need for credit ratings? The susceptibility of corporate bonds to price volatility varies based on their credit rating. High Yield bonds (i.e. bonds that meet lower credit quality standards) are innately more volatile in price than Investment Grade bonds (i.e., bonds of higher credit quality). This, consequently, creates greater sensitivity to undue risk potentially caused by overly early publication of trade details which, in turn, creates greater sensitivity and volatility in risk price provision caused by the same. This necessitates different levels of protection for those instruments that have greater price volatility. Having a distinction between IG/HY corporate bonds allows for more tailored transparency levels for instruments with different price volatility profiles. Credit rating is a criterion used by TRACE in the US for several years without difficulty; in the UK the FCA has just adopted credit rating as an important element for the calibration of the FCA’s proposed transparency models. AFME are confident that this approach in other jurisdictions can provide sufficient reassurance for regulators in the EU as well, regarding the feasibility of using credit ratings and can better help achieve the goal of competitiveness of EU capital markets with other leading global financial centres Wide support for use in transparency framework and evidence of their current use in EU regulation The European Commission expert stakeholder group on equity and non-equity market data quality and transmission protocols have also recommended in their Report on bonds (available here) that ESMA should consider the distinction of IG vs HY corporate bonds. Similarly, ESMA’s own Securities & Markets Stakeholder Group (SMSG) in its advice to ESMA also recommend the distinction between IG and HY to result in a more refined calibration approach (further details here). It should be noted that the ECB rely on credit rating as part of its assessments in the context of their prudential regulation and monetary policy powers. Specifically, the Eurosystem credit assessment framework relies on credit ratings from external credit assessment institutions (ECAIs). The different credit rating grades are mapped to a harmonised rating scale in order to make the ratings comparable across systems and sources, with 1-3 representing investment-grade status while steps 4-5 are for non-investment grade status. In addition, at the EU level there is already a credit assessment framework based on External Credit Assessment Institutions (ECAIs) that applies in the context of various EU regulations, including the CRR and EMIR, market participants are mandated to conform with that. We further note that ESMA already operate a potential source of the relevant data in the form of the European Rating Platform (ERP) which incorporates ratings data from all authorised credit rating agencies, including the 3 most globally recognised ones. Given ESAs already apply the mapping table of ECAIs’ credit assessments pursuant to implementing CRR regulation, this could effectively address any operational issues that might arise when using credit ratings as part of the MiFIR post-trade transparency deferral calibrations, if ESMA were willing to host a golden source (flag IG/HY per ISIN) available to the industry. Another option would be to leave the implementation to the industry (as the FCA and FINRA have done) with the determination defined at the level of investment firms, APAs and trading venues. Victoria Webster, Managing Director, Fixed Income, AFME Dr Thorsten Freihube, Director, Market Practice & Regulatory Policy, bwf Rudolf Siebel, Managing Director, BVI German Investment Funds Association Susan Yavari, Deputy Director, EFAMA Andy Hill, Managing Director, Co-head of Market Practice and Regulatory Policy, ICMA

The Association for Financial Markets in Europe (AFME) would like to extend its congratulations to the new College of Commissioners as they enter office today under the leadership of Commission President Ursula von der Leyen. As the voice of banks active in European wholesale capital markets, we look forward to supporting the work of the new Commission and assisting Commissioner Maria Luis Albuquerque and her team where we can as they seek to build the Savings and Investments Union. Commenting on the appointments, AFME’s CEO, Adam Farkas, said, “On behalf of our members, I want to extend our sincerest congratulations to the members of the new Commission. To ensure the EU remains competitive globally, we need to better mobilise capital and unlock private sector funding. This Commission has rightly recognised that a scaled-up, integrated and more efficient European capital market will be a critical building block to support its broader political and economic objectives. We look forward to working with Commissioner Albuquerque and the other members of the College as they work as a team to address the complexity of the challenges we face.” – Ends –

The Association for Financial Markets in Europe (AFME), in collaboration with eleven other European and international organisations, has today published the seventh edition of the “Capital Markets Union – Key Performance Indicators” report, tracking the progress of Europe’s capital markets against nine key performance indicators and analysing the progress over the past seven years. Adam Farkas, Chief Executive of AFME, said: “Our latest CMU KPIs report demonstrates that EU capital markets continue to face major structural challenges. We are lagging behind other regions across most key areas, including access to finance for corporates and SMEs, FinTech ecosystems, and market liquidity.” “To ensure the EU remains competitive globally, we need bold reforms to better mobilise capital and unlock private sector funding. An integrated and more efficient capital market can fund the initiatives critical to Europe’s economic competitiveness.” Among the key findings of the 2024 report on European capital markets’ performance: EU Capital Markets Falling Behind: Despite some cyclical gains, the EU lags behind the US, UK, and China in most key indicators, such as access to capital, global interconnectedness, and market liquidity. The EU’s capital markets remain fragmented, undermining economic competitiveness on a global scale. ESG Leadership, but Growth Slowing: The EU continues to lead in sustainable finance, with ESG bonds accounting for 13% of total bond issuance in 2024, ahead of the US and UK. However, growth in EU ESG issuance has not kept pace with growth in non-ESG issuance, with the overall share of ESG issuance down from 15% in 2021, signalling a potential plateau. Deteriorating Intra-EU Integration: The report highlights a worrying decline in financial integration within the EU, a trend also noted by the European Central Bank. This fragmentation threatens the EU's overall financial stability and its ability to compete globally. EU Securitisation Market Remains Underdeveloped: The EU securitisation market continues to trail behind those of the US, UK, and Australia. Currently, only 1.9% of outstanding EU loans are transformed into securitised vehicles or loan sales, compared to 7% in the US, 2.8% in Australia, and 2.2% in the UK. Issuers from only 9 of the 27 EU member states utilised securitisation as a source of funding in the first half of 2024. Widening Market Disparities: Northern European nations, such as Luxembourg and the Netherlands, boast deeper capital markets and greater access to finance, while countries in Eastern Europe lag behind. This disparity poses a significant challenge to the EU’s ambition for an integrated capital market. EU FinTech Ecosystem Stalling: Private investment in EU FinTech remains lower than in the US and UK, limiting the region’s progress in digital finance. However, the EU has taken a leadership position in the issuance of tokenised bonds, accounting for 20% of the global market in this emerging area. Addressing the Competitiveness Gap One of the most pressing concerns highlighted in the report is the EU’s annual funding gap of €800 billion. The funding is required for key areas like digitalisation, infrastructure and sustainability all of which are essential for boosting the EU’s long-term competitiveness. Unlocking the potential of capital markets will be key to addressing this shortfall. The report stresses the importance of mobilising household savings, with €11 trillion currently held in low-yielding EU cash and bank deposits. Shifting some of these funds into productive investment vehicles will be essential to strengthening the EU’s capital market ecosystem. Without ambitious structural reforms, the EU risks further market fragmentation and a decline in global market capitalisation. The report warns that while the EU has the scale and resilience to compete with the US and China, significant reforms are needed to overcome internal market fragmentation and to unlock Europe’s full potential. The report was authored by AFME with the support of the Climate Bonds Initiative (CBI), as well as European trade associations representing: business angels (BAE, EBAN), fund and asset management (EFAMA), crowdfunding (EUROCROWD), retail and institutional investors (European Investors), publicly quoted companies (EuropeanIssuers), stock exchanges (FESE), venture capital and private equity (InvestEurope), private credit and direct lending (ACC) and pension funds (PensionsEurope). – Ends –