Exclusive: Germany shields parts of Deutsche Börse from EU oversight
The EU is negotiating a reform in Brussels to better integrate its capital markets. Germany has secured an exemption for major European operator Deutsche Börse’s domestically focused trading venues from centralised supervision, leaving a key part of the system under regional control.
Some sections of Deutsche Börse’s trading venues would continue to be governed by regional authorities due to Germany’s lobbying in Brussels, according to two sources familiar with the negotiations. The Irish chair of the member state discussions has included this exemption in the current compromise text. This could potentially weaken the proposed reform or hinder an agreement on capital markets integration, a key legislative priority for the European Union.
Centralization of oversight is one aim of the reform, aiming to shift supervisory responsibilities to the European Securities and Markets Authority (ESMA). However, Deutsche Börse, seen as a major player, faces opposition from other member states regarding the exclusion of some trading venues from direct ESMA supervision. The German government clarified that the exemption would only apply to trading venues with a domestic focus, not the entire Deutsche Börse Group.
Nonetheless, Deutsche Börse’s financial market infrastructure entities (CCPs and CSDs) will still be directly supervised by ESMA from the outset. Central counterparties manage risks in financial transactions, while central securities depositories hold securities and facilitate trade settlements. Capital markets facilitate the buying and selling of long-term financial instruments, supporting business growth and funding.
The reform aims to address fragmentation in capital markets and boost European investment, but cross-border operations can be expensive and administratively burdensome due to varying rules across member states. The EU’s Savings and Investments Union strategy seeks to reduce fragmentation and encourage investment. Despite calls from European Central Bank President Christine Lagarde and former Italian Prime Minister Mario Draghi, the success of the reform hinges on whether other member states will seek similar exemptions and the extent of ESMA’s authority.
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