Market integration, supervisory coherence and competitiveness: LSEG’s view of the European Commission’s Market Integration and Supervision Package

The Market Integration and Supervision Package (MISP) is important to the future of Europe’s capital markets. Efficient supervision, enhanced transparency and greater legal certainty across the Union are key enablers of competitiveness, innovation and financial stability. The package has the potential to support a more coherent supervisory framework, accelerate innovation and strengthen the level playing field across the EU.

LSEG believes the package could deliver significant benefits. Two areas, in particular, intersect directly with our activities as a systemically important market infrastructure provider and as a data and index provider: supervision and settlement finality.

One of the most consequential elements of the MISP is the proposal to grant ESMA direct supervisory authority over significant central counterparties (CCPs). LSEG has long supported such a move. While recent reviews of EMIR have moved in this direction, they have yet to deliver a genuinely streamlined and coherent framework for the supervision of EU CCPs.

At present, the supervisory landscape for EU CCPs remains fragmented and multilayered, combining national competent authorities, supervisory colleges and EU-level coordination. Although this model has improved information-sharing over time, it continues to produce uneven supervisory outcomes, operational complexity and lengthy approval timelines. In practice, this constrains innovation and weakens competitiveness relative to other major jurisdictions, particularly outside the EU. This is a key concern for globally active CCPs such as LCH.

A truly centralised supervisory model, built around a single rulebook and a single supervisor for significant CCPs, would address many of these challenges. In LSEG’s experience, including through ESMA’s direct supervision of LCH Limited, centralised EU-level supervision can deliver greater consistency, more predictable outcomes and faster decision-making, without compromising high standards of risk management.

That said, centralisation should not come at the expense of simplicity. National competent authorities and central banks should continue to play an important role, but the revised framework must avoid preserving the duplication and procedural complexity it is intended to remove. Clear criteria for determining which CCPs fall under direct EU supervision, alongside streamlined governance structures and a single point of supervisory engagement, will be essential to deliver genuine simplification and enhanced competitiveness.

The MISP also clarifies ESMA’s supervisory role over index providers, building on the revised Benchmark Regulation. LSEG supports stronger EU-level oversight, as well as the principle of an associated supervisory fee framework.

For supervision to be effective and sustainable, however, it must also be predictable and proportionate. As currently envisaged, the proposed fee framework risks introducing volatility and disproportionate costs for administrators of significant benchmarks, particularly where fees are linked to turnover. Such unpredictability complicates long-term business planning and investment decisions in the EU.

A capped fee model would better reflect the practical realities of supervision. As ESMA’s supervisory processes mature and economies of scale emerge, a stable and predictable fee structure would align costs more closely with supervisory effort while maintaining robust oversight.

LSEG welcomes the Commission’s ambition to modernise and harmonise the EU settlement finality framework. Legal certainty at the point of settlement is fundamental to trust in post-trade infrastructures and is becoming increasingly important as new technologies and cross-border digital solutions develop.

To achieve this effectively, the transition to a new Settlement Finality Regulation (SFR) must be smooth and proportionate. Existing EU and third-country systems that already benefit from settlement finality protections should, where possible, be grandfathered into the new regime. Where reapplication is required, sufficiently long transition periods will be essential to avoid unnecessary legal uncertainty.

The SFR should also provide clarity on the treatment of third-country systems, including registration criteria and the scope of finality protections. Consistency across EU legislation, and alignment between EU and third-country regimes, will be key to preventing fragmentation and preserving market confidence.

Overall, the MISP represents a meaningful step towards a more coherent and competitive EU financial marketplace, provided it is implemented in a proportionate, simple, and well-sequenced manner. It also signals a significant evolution in ESMA’s role, with the potential to become the supervisor of most LSEG entities, building on a long-standing and constructive relationship across multiple regulatory areas, particularly in clearing.

This transition offers an opportunity to further strengthen supervisory consistency and effectiveness across the Union. LSEG is confident that ESMA can continue to build on its recent progress and develop into a world-class supervisor of CCPs, combining deep technical expertise with a pragmatic and proportionate approach that supports both robust risk management and innovation.

As the package advances, LSEG remains committed to constructive engagement with policymakers and supervisors, contributing its operational experience to help shape a framework that is both effective in practice and supportive of the EU’s broader competitiveness and strategic objectives.