Markets: The European Way View from Poland

Europe needs markets that are larger, cheaper and simpler to use. The goal is to channel more capital to businesses and to make household and institutional savings work more efficiently. The fastest path is to remove real legal, tax and operational barriers and to achieve more consistent supervisory practice. Harmonisation should focus on rules and processes, not on imposing a single business model or costly technical solutions that add no value.

Let’s go to the detail. Excess dependence on bank financing holds back private investment. Especially in innovation! Capital markets can take a bigger role if incentives improve and obstacles disappear. These obstacles include difficult investor identification in cross-border transactions, burdensome withholding-tax procedures and cumbersome account and data portability between intermediaries. Harmonisation that simplifies these elements will lower transaction costs and improve product access. It also will increase market depth, understood as the ability to execute larger orders without materially moving the price. A harmonised European market will deliver consistent rules and a uniform supervisory approach.

Fees and charges should be proportionate to the scale of the participant. So smaller firms pay less! Rules on transparency, reporting and best execution should be clear, comparable across the Union and... applied in the same way. Their design should deliver measurable benefits to clients and issuers. At the same time, competition among trading venues and service providers must remain because it drives innovation, including at local level. Regulatory changes should be designed in a simple and proportionate way.

Policymakers should show the benefits for clients and issuers and the expected savings in cost and time. Obligations must scale with the size and risk of the activity. Harmonisation should grow by implementing working solutions within groups of countries and firms that others join when benefits are visible.

Europe has a different market structure than the United States, so it is better to remove barriers in data, post-trade and supervision instead of mandating expensive technical requirements. Decision-making and supervisory processes should be faster and more predictable. During transitions, there should be clear guidance and no-action approaches where a supervisor publicly states that within a defined scope and period it will not apply sanctions until new requirements are clarified.

In trading, the priority is to lower costs without limiting client choice. The best execution rule already requires testing across price, costs, speed, likelihood of execution and settlement and other relevant factors. More effective supervision here does not mean adding new system links between platforms. It means data-driven thematic reviews. Supervisors periodically review selected areas such as best execution or cost disclosures using comparable datasets collected from firms and publish findings and good practices. This raises market standards without building infrastructure that does not deliver client value.

IDM supports clearer conditions and closer monitoring for the Reference Price Waiver (RPW) and the Negotiated Trade Waiver (NTW). These are pre-trade transparency waivers that allow execution at a reference price or through negotiation. The right approach is periodic data analysis. Supervisors set concrete size thresholds and reporting scopes based on observed liquidity and the real price impact of trades. They then check regularly whether thresholds still protect transparency while not blocking large trades that institutional investors need. Closer monitoring means comparable EU-wide reviews of prices, sizes and deviations and quick parameter updates when results justify a change.

IDM opposes retail Direct Market Access. Letting retail clients send orders directly to exchange systems raises error and abuse risks and shifts control costs to market infrastructure. The better path is to strengthen investment firms’ front-end controls including risk checks, limits and error prevention.

On the other side, high-frequency trading can deliver benefits. But it needs a level playing field. This activity can improve market microstructure in seconds and milliseconds, for example order sequencing and quote stability, yet it can also create short-lived apparent liquidity. Supervision and rules should focus on equal access to technology, control of strategy impact on the market, transparent performance and robust safeguards against abuse without privileging any group of participants. For these reasons IDM proposes a latency floor, meaning short execution delays that remove potential advantages from superior infrastructure.

Post-trade needs also improvements. IDM supports wider use of T2S (Target2-Securities). This is the common European platform for settling and recording securities transactions in central bank money. It works like a single settlement hub for many countries and reduces risk and cost. More cross-border transactions should settle on T2S where this brings savings and higher safety. ESMA and the ECB should jointly remove technical and operational obstacles such as different message formats, non-aligned settlement windows and inconsistent instruction processes.

To complete the circle, market data and access to information is essential for the proper functioning of the markets. Il must become cheaper and more transparent! Market-data costs grow faster than the benefits that end clients actually receive. Trading venues and APAs, meaning Approved Publication Arrangements that publish off-exchange trades, should use clear public price lists and discount policies that reflect real usage. The European Union should limit duplicative fees and licences that add no value for investors and issuers. Unified rules for data redistribution and algorithmic analysis will lower entry barriers for smaller firms and increase competition in access to information.

Supervision should support competitiveness. IDM favours aligning supervisory practice through short guidance on concrete problems, joint data reviews and cross-country comparisons rather than adding new costly technical obligations. Data-driven thematic inspections, common methodologies and published good-practice examples matter most. There should also be transitional guidance before new rules apply so firms do not delay compliance investments.

On direct supervision IDM first supports the national level and only then a pan-European level. Local supervisors know the market and participants better, which supports proportionality and efficiency. Centralisation makes sense where clear economies of scale and consistency exist, for example in cross-border data or supervision of groups active in many Member States.

Better law-making reduces burdens and costs. The objective is measurable cuts in administrative duties and faster time-to-market for new products and services. The European Union should review reporting fields and split them into core and auxiliary, allow data-quality tolerances where errors do not create market risk and align definitions across Market in Financial Regulation (MiFIR), European Market Infrastructure regulation (EMIR) and Securities Financing Transactions Regulation (SFTR). Phased implementations, transitional guidance and simple technical formats are often better than layering additional reports.

IDM supports also simplification and proportionality in the Retail Investment Strategy. IDM requests removal of the best interest test. The inducements test should assess only whether the inducement raises service quality and should not become a product price assessment. IDM also requests removal of the ban on accelerators, understood as quantitative criteria for inducements.

On value for money IDM opposes supervisory benchmarks. If they remain, they should be non-public, auxiliary and preferably national. IDM proposes replacing the appropriateness test with a simple risk warning for execution-only sales and a light suitability test for simple products and for all advisers including tied agents. IDM asks to delete the assumption that a product with add-on features is automatically unsuitable. IDM supports a simpler KID. IDM proposes easier professional-client opt-up by lowering the annual-trades requirement from 40 to 30 and the single-trade size from 500 thousand euro to 250 thousand euro and by widening the experience criteria.

IDM opposes the Financial Data Access proposal. FIDA would strengthen global platforms at the expense of local investment firms and SME financing and it is inconsistent with the Savings and Investments Union. Standardised access to data would encourage uniform mass offers and limit locally tailored services and advice for less affluent clients. The proposal imposes high costs on firms for building and maintaining APIs, keeping registers and managing client consents to share data and for ensuring data safeguards without adequate compensation through data-sharing fees.

The perspective of Poland and the region requires local specifics to be respected. The Savings and Investments Union should leave space for local competition and innovation while keeping core rules consistent. Local markets are essential for small and medium enterprises, debut issuers and retail clients. The biggest gains will come from changes that truly lower post-trade costs, ease access to data and simplify withholding-tax procedures.