The European Commission published its market integration package on 4 December 2025 (the “Market Integration Package”).
The Market Integration Package comprises of a draft regulation regarding the further development of capital market integration and supervision within the Union (the “Integration and Supervision Regulation”), a draft directive regarding the further development of capital market integration and supervision within the Union (the “Integration and Supervision Directive”) and a draft regulation replacing the Settlement Finality Directive and amending the Financial Collateral Directive (the “SFD Regulation”).
The Market Integration Package forms part of the EU’s wider Savings and Investment Union strategy, which was formally launched in March 2025. The European Commission is seeking to reduce fragmentation in trading infrastructures, post-trading infrastructures and asset management, as well as to remove cross-border barriers, enhance supervision and update the framework for new technologies.
Who should be interested in the Market Integration Package?
The Integration and Supervision Regulation proposes to amend Regulation (EU) No 1095/2010 (ESMA Regulation), Regulation (EU) No 648/2012 (EMIR), Regulation (EU) No 600/2014 (MiFIR), Regulation (EU) No 909/2014 (CSDR), Regulation (EU) 2015/2365 (SFTR), Regulation 2019/1156/EU (CBDR), Regulation (EU) 2021/23 (CCPRRR), Regulation (EU) 2022/858 (DLTPR), Regulation (EU) 2023/1114 (MiCAR), Regulation (EC) 1060/2009 (CRA Regulation), Regulation (EU) 2016/1011 (Benchmark Regulation), Regulation (EU) 2017/2402 (Securitisation Regulation), Regulation (EU) 2023/2631 (EuGB Regulation) and Regulation (EU) 2024/3005 (ESG Ratings Regulation).
The Integration and Supervision Directive proposes to amend Directive 2009/65/EC (UCITS Directive), Directive 2011/61/EU (AIFMD) and Directive 2014/65/EC (MiFID). The SFD Regulation proposes to replace Directive 98/26/EC (Settlement Finality Directive) and amend Directive 2002/47/EC (Financial Collateral Directive).
Given the breadth of these legislative proposals, it is unsurprising that numerous stakeholders are impacted by the Market Integration Package. Some stakeholders, such as the operators of trading venues, are directly impacted while others, such as investors in financial instruments, are indirectly impacted.
As anticipated, the Market Integration Package is an extensive package containing a range of proposed amendments to current laws. All stakeholders will need to assess these proposed amendments carefully and with a view to consider what changes may be necessary in the time ahead to their business models, policies and processes. In this article, we outline a few of the key elements of the Market Integration Package which are likely to be particularly relevant to our clients in the finance and debt capital markets sectors.
New areas for ESMA supervision
The Market Integration Package proposes that the European Securities and Markets Authority (“ESMA”) becomes a direct supervisor of core EU market infrastructure. Supervisory reform would include transferring supervisory responsibilities to ESMA for certain significant and cross-border entities in trading and post-trading, as well as for crypto-asset service providers. Where applicable, significance would be assessed by reference to the detailed criteria set out in the proposed amendments to the different sectoral legislation and contained in the Market Integration Package. ESMA would become the direct supervisor of significant trading venues, significant central counterparties (“CCPs”), Pan-European Market Operators (“PEMOs”) as well as their trading venues, significant central securities depositories (“CSDs”) and all crypto-asset service providers.
Trading venues
The new PEMO status provided for in the Market Integration Package would allow groups with trading venues in multiple EU member states to operate under a single license, through a single legal entity and under the supervision of ESMA. The PEMO regime is optional — it does not replace the existing authorisation requirements for trading venues in the EU but offers a voluntary alternative for operators seeking a pan-European model. For trading venue groups that choose to keep operating as a group of individual entities (subject to individual authorisation), the proposal also provides solutions including more streamlined procedures that would allow them to organise themselves more efficiently within the same group.
Amendments to CSDR settlement
CSDs are entities that ensure the settlement of securities. Under the proposed amendments to CSDR, the settlement landscape would be steered towards a linked network. The Market Integration Package introduces the concepts of CSD hubs and spokes. CSDs providing services in several EU member states and those processing a high value of settlement instructions relative to all settlement in the EU would act as hub CSDs. They would be required to establish links with one another, while the remaining CSDs acting as spoke CSDs would be required to be connected to at least one of these hubs (to the extent that such a link is not already in place). The use of TARGET2-Securities (T2S), the settlement platform operated by the Eurosystem, would also be promoted by requiring EU CSDs that settle in one of the platform’s supported currencies to connect to T2S and offer T2S settlement to its participants.
Settlement finality and financial collateral rules
The SFD Regulation proposes to replace the Settlement Finality Directive with a directly applicable and binding EU regulation to ensure greater harmonisation and improve legal certainty. Other key proposed changes to the current settlement finality regime in the EU include a clearer conflict-of-law provision to allow a uniform interpretation by EU member states, harmonisation of the list of eligible participants and eligible financial instruments to ensure that the scope of protection under the SFD Regulation is the same across EU member states, harmonisation of the designation process and conditions for EU systems, as well as the use of a central database for the submission of information and documents for the designation and registration of systems.
The SFD Regulation proposes to facilitate distributed ledger technology (“DLT“) based systems to be designated under the new SFD Regulation subject to certain requirements being met. Moreover, as the definition of collateral security under the Settlement Finality Directive and the proposed SFD Regulation is closely linked to the definition of financial collateral under the Financial Collateral Directive, the definition of financial collateral under the Financial Collateral Directive in relation to DLT would also be updated to align with the DLT-related updates introduced under the SFD Regulation.
What happens next?
The Market Integration Package has been submitted to the European Parliament and the Council of the EU for approval pursuant to the EU’s ordinary legislative procedure. The Market Integration Package could be materially revised and amended as it works its way through this legislative process. Until the Market Integration Package is approved by the EU and enters into force, the current law remains in force.
For further information on the Market Integration Package, please contact Turlough Galvin, Alan Keating, Christian Donagh, Maireadh Dale, William Foot, Alan Bunbury, Vincent McConnon, Gearoid Murphy or your usual Matheson contact.