Market Integration Package - EU Commission proposes radical overhaul of trading and post-trading infrastructures - Industries

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Market Integration Package – EU Commission proposes radical overhaul of trading and post-trading infrastructures

On 4 December 2025, the EU Commission published a comprehensive package of legislative proposals addressing the fragmentation in the EU capital markets.

This newsflash is part of a series of newsflashes dedicated to the changes proposed in the recent EU Commission’s Market Integration Package. For an overview of all the proposed changes, please see our main newsflash on the EU Market Integration Package.

Trading infrastructure reforms

Financial instruments are traded in more than 300 trading venues within the EU, with the top 10 venues capturing approximately 75% of trading volumes.

Harmonisation of rules: the proposal seeks to harmonise rules for trading venues by transferring key provisions from MiFID II to MiFIR, thus creating directly applicable rules across all Member States.

ESMA supervision of significant trading venues: supervision of trading venues considered as significant would be transferred to ESMA. A trading venue would be deemed significant if the ratio between its trading volume (or aggregated group trading volume) and the total EU trading volume is equal to or greater than 5% for any of the following classes: shares, ETFs, bonds or derivatives relating to equity, credit, interest rate, currency or commodities, or if it has both significant size (at least 2% of the total EU trading volume) and cross-border dimension (at least 50% of the trading volume from participants established in Member States other than the home Member State).

Pan-European Market Operator (PEMO) status: the proposed optional PEMO status would allow the operation of several trading venues in multiple Member States under a single licence.

Other measures: the proposal aims to enhance passporting opportunities for trading venues, facilitate intragroup allocation of resources without triggering complex third-party outsourcing rules and improve the consolidated tapes for equities and exchange-traded funds by requiring it to display the five best buying and selling prices with available volumes.

Post-trading reforms

i) Central Securities Depositories (CSDs) – there are currently 32 CSDs offering settlement services in the EU. The EU Commission is proposing amendments to the CSDR aimed at addressing what it characterises as persistent inefficiencies and fragmentation.

Key proposed changes:

Freedom of issuance: the package intends to enhance passporting opportunities for CSDs and announced a reduction of identified barriers to the freedom of issuance.
ESMA supervision of significant CSDs: a CSD would be considered significant where: (i) the ratio between the value of the settlement instructions that it processes (or aggregated at group level) and the total value of settlement instructions processed by all EU CSDs is equal to or greater than 5%, and (ii) it is of substantial importance for the functioning of the securities market and the protection of investors in at least three host Member States.
Hub model: CSDs providing services in several Member States and those processing a high value of settlement instructions would act as hub CSDs and would be required to establish links with one another. The remaining CSDs would be required to be connected to at least one of these hubs.
TARGET2-Securities (T2S) integration: EU CSDs that settle in one of the currencies supported by T2S would be required to connect to T2S and offer T2S settlement to participants.
DLT integration and e-money token settlement: the proposal seeks to integrate Distributed Ledger Technology (DLT) into the CSD regulatory framework and expand the scope of assets that can be used to settle the cash leg of a securities transaction. It also amends the framework to allow settlement with certain e-money tokens authorised under MiCA, subject to certain conditions.
Individual CSD services: a wide range of financial entities would be permitted to individually provide specific CSD core services – namely DLT notary services or DLT central maintenance services – upon obtaining specific permission.
Transparency: transparency measures requiring clear pricing and fee disclosures from CSDs are intended to increase competition.

ii) Central Counterparties (CCPs) – there are currently 14 CCPs providing clearing services in the EU. The proposed amendments to EMIR focus on giving ESMA direct supervision over significant CCPs, including new processes to identify them.

Key proposed changes:

ESMA supervision of significant CCPs: a CCP would be deemed significant where: (i) the average open interest of securities transactions cleared exceeds EUR 100 billion, (ii) the average gross notional outstanding of OTC derivatives cleared over a period of one year exceeds EUR 500 billion, (iii) the average aggregated initial margin requirement and default fund contributions over a period of one year exceed EUR 25 billion, or (iv) it belongs to the same group as another CCP, CSD or trading venue under ESMA supervision.
Open access enhancements: the proposal streamlines rules for trading venue access to CCP services and CCP access to trading venue feeds. The practice of “preferred clearing” would be prohibited where two parties choose to clear at different CCPs that have already been granted access to a trading venue and have established interoperability arrangements.

iii) Settlement finality – the Settlement Finality Directive would be converted into a regulation to address what the EU Commission characterises as fragmentation caused by divergent national implementation. The new regulation would be technology-neutral, enabling a wider range of systems to benefit from settlement finality protections, including systems using DLT.

Next steps: legislative process and implementation timeline

It is critical to note that these are EU Commission proposals only. The proposals must now undergo the EU legislative process, requiring approval by both the EU Parliament and the Council of the EU. Further negotiations and amendments can be expected.

The legislative proposals include a phased implementation timeline: most amendments would apply 12 months (18 months for the MiFID II changes) after entry into force, with amendments relating to ESMA’s supervision of significant CSDs and trading venues applying 24 months after entry into force.

For further information on the other aspects of the Market Integration Package, such as digital finance, investment funds supervision and investment funds distribution, please refer to our related newsflashes.