Response to EC consultation on recovery and resolution of non-banks

The Federation of European Securities Exchanges (FESE) has published a response to the European Commission Consultation Paper on Possible Recovery and Resolution Framework for Financial Institutes other than Banks. Our response represented our position that regulated markets (RMs) should not be subject to such frameworks.

Unlike banks or insurance companies, RMs do not assume risk or trade on their own behalf; they simply facilitate transactions between market participants. Therefore, their failure would not pose a systemic risk to financial stability. FESE notes that technical disruptions, while possible, are operational rather than systemic and can typically be managed through existing safeguards like backup systems and regulatory oversight.

This response demonstrated that common indicators of systemic relevance, such as size, interconnectedness, leverage, and economic importance, do not apply in a meaningful way to RMs. These markets are generally small, not highly interconnected, and do not engage in risky activities like leverage or maturity transformation. We believe that existing insolvency rules are sufficient and that no additional recovery or resolution tools are needed for RMs. As, regulated markets are already closely supervised by authorities, which can intervene if license conditions are not met.