The FIX Trading Community submitted recommendations to the European Securities and Markets Authority calling for changes to European post-trade reporting rules, warning that duplicate and technical reports prevent accurate measurement of the region's equity market size and liquidity. The industry association responded to ESMA's Call for Evidence on European equity market structure, which closed on June 30. Current trade flags do not allow data users to distinguish price-forming transactions from duplicate reports, internal risk transfers, and other events that do not represent new economic activity, affecting how investors assess liquidity and compare European markets with the United States and Asia.
FIX Identifies Duplicate Reporting and Technical Transfer Problems
FIX Executive Director Jim Kaye stated that current trade flagging methods prevent investors from separating price-forming transactions from duplicate or technical reporting, resulting in dramatic underestimation of European market size and liquidity. Reported trading volumes influence how investors assess liquidity, compare European markets with the United States and Asia, select execution venues, and determine whether large orders can be completed without moving prices. If the same transaction is reported several times or technical transfers are counted as market activity, the resulting data can misrepresent where liquidity is available and how much genuine investor interest exists.
Kaye said the problems make the overall size of the European market impossible to measure accurately and complicate trend analysis across trading sessions, special trading days, and other market events. He stated that clarifications to RTS 1 to enable accurate market volume calculations can be enacted quickly and easily, positioning European markets as transparent, efficient, and attractive to global capital.
Cross-Border Transactions Generate Multiple Reports
RTS 1 sets out transparency requirements for shares, exchange-traded funds, and other equity-like instruments under the Markets in Financial Instruments Regulation. FIX argues that the framework does not always identify the economic purpose of a transaction clearly enough. A transfer between two entities in the same corporate group may be conducted for risk management rather than to express a new investment decision. A transaction involving a chain of intermediaries may generate several reports even though only one underlying trade took place.
Cross-border activity creates another source of duplication. Following the United Kingdom's departure from the European Union, firms can face overlapping UK and EU transparency obligations. A trade involving entities subject to both regimes can consequently appear in more than one public data set. FIX wants the EU to recognize the United Kingdom's RTS 1 post-trade transparency regime as equivalent for these purposes, which the association said would prevent transactions already reported under UK rules from being published again under the EU framework.
The group recommended that ESMA clarify the treatment of counterparty chains and off-book cross-border transactions. Similar concerns were raised during the UK Financial Conduct Authority's review of its equity-market rules, where respondents identified overlapping cross-border obligations as a cause of repeated trade reports.
FIX Proposes Technical Transfer Exclusions From Market Volumes
FIX recommended extending exemptions from post-trade transparency requirements to cover more non-price-forming events. The association wants intra-group risk-management transactions excluded when they do not represent a change in beneficial ownership or new market interest. This distinction matters because market volume is generally used as a proxy for liquidity, and technical transfers, duplicate reports, and internal movements do not necessarily provide liquidity that another investor can access.
FIX's response separates price formation from accessibility. Price-forming transactions contain genuine economic interest and can contribute information to the market price. Accessible liquidity refers to trading opportunities that are available and suitable for a particular client at a particular time. Liquidity displayed in a public order book may be immediately accessible to an automated trading system, while a negotiated block trade, closing-price transaction, or bilateral institutional trade may be available only to certain counterparties, subject to size, timing, or relationship requirements.
ESMA raised the same issue in its consultation. The regulator said lit continuous trading declined between 2022 and 2025, while closing auctions, frequent batch auctions, and systematic internaliser trading gained activity. ESMA asked market participants how liquidity should be assessed across mechanisms that differ in their ability to form prices and in who can access them.
ETF Transactions Currently Produce Three Separate Reports
FIX called for changes to the reporting of ETF transactions conducted at net asset value. Under the current EU approach, different stages of an ETF NAV transaction can result in three reports. FIX wants that requirement reduced to one report, bringing the EU closer to the FCA's treatment of such transactions. ETF trades priced at NAV differ from ordinary exchange transactions because the final price is based on the calculated value of the underlying portfolio rather than the market price available when the order is arranged.
The association argues that a single report would preserve transparency while reducing the operational burden on firms and making consolidated data easier to interpret. The FCA previously concluded that special treatment was appropriate for ETF transactions executed at NAV. During its review of UK equity-market rules, the regulator found that 98% of ETF trades and 46% of ETF volume were being reported in real time. The FCA estimated that introducing a NAV deferral would reduce immediate reporting by 0.7% of trades and 2.7% of volume.
FIX Recommends Separate Flag for Closing Auction Transactions
FIX wants ESMA to expand the definition of benchmark trades to include transactions conducted at a market's official closing price. The association proposed adopting the CLSE flag already introduced by the FCA. Closing auctions have become a larger part of European equity trading because index funds, exchange-traded funds, and institutional portfolios often need to execute at the official end-of-day price. These transactions can account for substantial volume, particularly during index rebalances, derivatives expirations, and the final trading days of reporting periods.
Without a dedicated flag, users cannot easily separate orders executed through the closing auction from bilateral transactions agreed at the closing price after it has been established. The FCA expanded its benchmark-trade definition to include transactions at market closing prices and introduced CLSE to identify them. FIX argues that adopting a similar approach in the EU would provide a clearer picture of closing-price activity and make UK and European data easier to compare.
Reporting Issues Could Affect European Consolidated Tape Quality
The reporting dispute has become more important as the EU prepares its first consolidated tape for shares and ETFs. ESMA selected EuroCTP in December 2025 as the applicant considered most suitable to operate the service, subject to authorization. The tape is intended to combine trading information from fragmented European venues into a single data stream, giving investors a broader view of prices and transactions across the EU.
A consolidated tape cannot correct every weakness in the information submitted to it. If source reports contain duplicates, inconsistent flags, or technical transactions presented as market trades, consolidating them could distribute the distortion more efficiently rather than eliminate it. Accurate classifications will affect how the tape calculates market shares, distributes data revenue, and helps investors compare execution across venues.
ESMA Plans Feedback Statement in Second Half of 2026
ESMA launched its market-structure review after observing changes in where and how European equities trade. In addition to addressable liquidity and post-trade flags, the consultation examined closing auctions, periodic auctions, systematic internalisers, and the decline in continuous lit trading. The regulator plans to issue a feedback statement during the second half of 2026.
FIX said its recommendations rely largely on established practices and could be implemented without redesigning Europe's market structure. The association offered to provide technical support. Kaye stated that the modifications are essential for European market development and efficiency, align with established practices, and will be relatively straightforward to implement.
FAQ
What did the FIX Trading Community recommend to ESMA regarding European equity market reporting?
The FIX Trading Community submitted recommendations to ESMA calling for changes to European post-trade reporting rules in response to the Call for Evidence on European equity market structure, which closed on June 30. FIX recommended extending exemptions from post-trade transparency requirements to cover more non-price-forming events, excluding intra-group risk-management transactions, reducing ETF NAV transaction reports from three to one, and adopting a separate flag for closing auction transactions.
Why does FIX argue that current European equity market reporting prevents accurate market measurement?
FIX argues that current trade flags do not allow data users to distinguish price-forming transactions from duplicate reports, internal risk transfers, and other events that do not represent new economic activity. Cross-border activity creates duplication because firms face overlapping UK and EU transparency obligations, causing a trade involving entities subject to both regimes to appear in more than one public data set. FIX Executive Director Jim Kaye stated that these problems make the overall size of the European market impossible to measure accurately.
When will ESMA respond to the market structure consultation?
ESMA plans to issue a feedback statement during the second half of 2026. The regulator launched its market-structure review after observing changes in where and how European equities trade, examining addressable liquidity, post-trade flags, closing auctions, periodic auctions, systematic internalisers, and the decline in continuous lit trading.
