Why did the European Commission propose the MISP?

As noted above, the MISP flows directly from the European Commission’s SIU, which identified market integration and efficient supervision as essential to strengthening EU economic competitiveness and resilience. The European Commission’s ambition is to create a fully integrated, efficient and scaled European capital market capable of supporting investment in the EU’s strategic priorities, including the green and digital transitions, defence capabilities, and long-term economic security. Deeper integration is also intended to deliver a positive cycle: more efficient capital markets produce better returns for savers and investors, encouraging greater participation and channelling private capital towards EU growth. What the European Commission is trying to achieve How this is reflected in the legislative proposals / might look in practice Remove barriers to market integration and leverage scale Eliminating obstacles in trading, post-trading and asset management to enable market participants to operate more seamlessly across EU member states and reduce cost differences between domestic and cross-border transactions, including through the introduction of Pan-European Market Operator (“PEMO”) status and enhanced passporting for regulated markets and CSDs. Enable integrated supervision Transferring direct supervisory competences over significant market infrastructures (certain trading venues, CCPs and CSDs and all CASPs) to ESMA and strengthening ESMA’s coordination role in the asset management sector, supported by an expanded ESMA mandate and an Executive Board with independent members. Facilitate innovation in digital finance Relaxing limits under the DLTPR, increasing proportionality and flexibility and providing greater legal certainty to encourage the adoption of distributed ledger technology and support tokenisation of financial instruments. Simplify the regulatory framework Converting certain directives into directly applicable regulations; narrowing the scope for nationally imposed gold-plating; and streamlining Level 2 empowerments and overlapping supervisory arrangements to ease compliance burden. Strengthen and harmonise the settlement and collateral framework Repealing and replacing the Settlement Finality Directive with a directly applicable Regulation, amending the Financial Collateral Directive and harmonising definitions and settlement finality moments to reduce systemic risk and eliminate national interpretation divergences, including accommodation of DLT and tokenisation. Create a competitive, globally relevant EU capital market Supporting EU economic competitiveness in a challenging global environment by enabling deeper cross-border investment, better access to capital for businesses and improved returns for savers as well as investors.

What is the implementation timeline?

March 2025: European Commission unveils the SIU strategy, identifying market integration and efficient supervision as core pillars and setting the policy context for the MISP. September 2025: European Parliament endorses new legislation to improve trading and post-trading systems as well as supporting technological innovation, building momentum for the package. 4 December 2025: European Commission publishes all three legislative proposals: the Master Regulation, the Master Directive, and the Settlement Finality Regulation. December 2025: Technical deliberations commence in the Council of the EU’s Working Party on Financial Services and Banking Union. Meanwhile, all three proposals are allocated to the ECON Committee in the European Parliament. March 2026: European Economic and Social Committee (EESC) adopts opinion supporting the objectives and measures set out in the proposals. 12 June 2026: ECON Committee publishes draft reports on all three MISP proposals. December 2026: ECON Committee expected to vote on negotiating position on all three MISP proposals. 2027 onwards: Political negotiations expected to conclude by early 2027 at the earliest; given complexity and broad scope, the process could stretch into 2027, with implementation potentially not taking place until 2027–2029. nclude negotiations by the end of 2026. July – December 2026: Irish Presidency schedules nine meetings of the Working Party on Tax Questions to discuss the proposal; two have already taken place, with early reports identifying a number of areas of disagreement between Member States. 4 September 2026: Next scheduled Council discussion on the DAC Recast. 11 December 2026: Targeted ECOFIN meeting at which the Irish Presidency aims to reach political agreement on the DAC Recast. Following political agreement: As the central Council legal basis for this file is Article 115 TFEU, the Directive will require unanimous approval by all Member States in Council, together with consultation of the European Parliament, before formal adoption. No indicative date for formal adoption, publication in the Official Journal, or national transposition deadlines had been confirmed as at the time of writing.

Who are the key institutional decision-makers?

Council of the EU: Minister Simon Harris (Ireland) – took over responsibility from July 2026 under the Irish Presidency of the Council of the EU. Working Party on Financial Services and Banking Union — technical-level deliberations. European Commission: Commissioner Maria Luís Albuquerque (EPP / Portugal) – responsible for leading this file through the legislative process. European Parliament: Economic and Monetary Affairs Committee (“ECON”) — lead committee. Markus Ferber (EPP / Germany) – rapporteur for the Master Regulation, calling for greater ambition on market integration and a stronger ESMA supervisory mandate. Eero Heinäluoma (S&D / Finland) – rapporteur for the Master Directive, welcoming the measures and calling for a stronger ESMA supervisory role in the asset management sector. Giovanni Crosetto (ECR / Italy) – rapporteur for the Settlement Finality Regulation.

What does this mean for your business?

The MISP is at a relatively early stage of the ordinary legislative procedure, having entered European Parliament committee work in mid-2026. Negotiations are expected to be complex and politically contested, particularly on the scope of ESMA’s supervisory powers. However, given the scale and ambition of the reforms, firms with material exposure to EU capital markets should begin monitoring and preparing now. The following points are most relevant: Map your regulatory footprint against the proposed changes. The MISP simultaneously amends a large number of existing EU legislative instruments across trading, post-trading, asset management and digital finance. Firms operating across multiple sectors (eg, investment firms that are also fund managers or that are active in crypto-assets) will need to assess the cumulative impact on their existing regulatory frameworks and licences. All stakeholders need to assess the MISP package carefully with a view to considering what changes may be necessary to their business models, policies and processes – while recognising that the final legislative text is not yet confirmed. Assess the supervisory implications of the proposed ESMA powers. If the proposed transfer of supervisory competence over significant trading venues, CCPs and CSDs, and all CASPs, to ESMA proceeds in anything close to the proposed form, the practical supervisory relationship for affected firms will change materially. Firms should assess which of their activities or entities may fall within ESMA’s proposed direct supervisory perimeter and what that means for their current NCA relationships. Prepare for the CASP supervisory transition. CASPs face a proposed 24-month transition period after the regulation’s entry into force before supervisory competence formally transfers to ESMA. Firms with applications currently under assessment by NCAs should monitor the transitional provisions closely and engage with their current NCA on the implications. Review cross-border distribution and passporting arrangements. The Master Directive and Master Regulation include significant reforms to passporting for regulated markets and CSDs, and to the cross-border distribution framework for UCITS and AIFs. Asset managers and fund operators with cross-border distribution models should assess the implications of the proposed changes, particularly the introduction of a harmonised depositary services passport and the proposed amendments to the CBDR. For more information, see here for our article discussing potential effects on UCITS and AIFs. Assess the implications of settlement finality reform for post-trade operations. The conversion of the Settlement Finality Directive into a directly applicable Regulation and the amendments to the Financial Collateral Directive are intended to harmonise settlement finality moments and collateral definitions. Firms active in post-trade services, including those using or developing DLT-based settlement systems, should assess how the proposed changes interact with their current operations and contracts. Engage in European Parliament and Council of the EU negotiations. The MISP is at the stage where engagement with rapporteurs, the ECON Committee and Council of the EU working party positions can still materially influence the final text. Firms with a material stake in specific provisions, particularly on ESMA supervisory powers, CASP supervision, DLT and settlement finality, should consider engaging at EU level either directly or through industry representative bodies during the legislative process rather than waiting for final text. Monitor national transposition of the Master Directive. As with all EU directives, the Master Directive will require transposition by each of the 27 EU member states. Given the political sensitivity of certain provisions and the risk of divergent national implementation, firms with cross-border operations should monitor transposition proposals in each relevant jurisdiction, as national implementing measures may vary in ways that affect their business models. Track Level 2 implementing work from ESMA. Key provisions of the MISP, including the new ESMA supervisory powers and the technical standards underpinning the settlement finality framework, will be operationalised through regulatory and implementing technical standards from ESMA. The timeline and content of that implementing work will be critical for compliance planning.

Acronym Meaning AIF Alternative Investment Fund AIFM Alternative Investment Fund Manager AIFMD Alternative Investment Fund Managers Directive BMR Benchmark Regulation CASP Crypto-Asset Service Provider CBDR Cross-Border Distribution of Funds Regulation CCP Central Counterparty CCPRRR Regulation on a framework for the recovery and resolution of central counterparties CMU Capital Markets Union CRAR Credit Rating Agencies Regulation CSD Central Securities Depository CSDR Central Securities Depositories Regulation DLT Distributed Ledger Technology DLTPR Distributed Ledger Technology Pilot Regulation ECON Economic and Monetary Affairs Committee (European Parliament) EMIR European Market Infrastructure Regulation ESMA European Securities and Markets Authority EU European Union IMF International Monetary Fund MiCAR Markets in Crypto-Assets Regulation MiFID Markets in Financial Instruments Directive MiFIR Markets in Financial Instruments Regulation MISP Market Integration and Supervision Package NCA National Competent Authority PEMO Pan-European Market Operator SFTR Securities Financing Transactions Regulation SIU Savings and Investments Union UCITS Undertakings for Collective Investment in Transferable Securities

The Market Integration Package – strengthening capital markets supervisory convergence

Author(s)

Expertise

Date

16/09/2026

The Market Integration Package is a legislative package aimed at deepening EU capital market integration and strengthening supervisory convergence.

What is the Market Integration Package?

On 4 December 2025, the European Commission published three legislative proposals under the banner of the Market Integration and Supervision Package (“MISP”). The package forms a central pillar of the Commission’s Savings and Investments Union (“SIU”) strategy – the successor to, and rebranded form of, the Capital Markets Union (“CMU”) agenda – and represents the most substantial single-market integration initiative in EU capital markets since MiFID II and MiFIR.

Despite previous attempts at reform under successive CMU Action Plans, EU capital markets remain fragmented. In 2024, EU stock market capitalisation represented approximately 73% of GDP, far below the equivalent US figure of 270%, reflecting persistent structural underdevelopment. The IMF has estimated that for financial services alone, internal barriers within the single market resemble a tariff exceeding 100%. The European Commission’s SIU strategy, unveiled in March 2025, identified market integration and efficient supervision as two of its four interconnected pillars, and the MISP directly addresses both.

The package comprises three legislative instruments.

the Master Regulation^[1] is a cross-cutting regulation amending a wide range of existing EU capital markets regulations: the ESMA Regulation, EMIR, MiFIR, CSDR, DLTPR, MiCAR, CCPRRR and CBDR, together with targeted amendments to the SFTR, CRAR, BMR, Securitisation Regulation, EU Green Bond Regulation and ESG Ratings Regulation.
the Master Directive^[2] amends the UCITS Directive, AIFMD and MiFID.
the Settlement Finality Regulation^[3] repeals and replaces the Settlement Finality Directive^[4] and amends the Financial Collateral Directive^[5].

The rationale for a combined omnibus approach reflects the European Commission’s assessment that fragmentation in EU capital markets is systemic and cross-sectoral. Piecemeal reforms have historically produced inconsistent supervisory frameworks and persistent barriers to cross-border activity. The MISP seeks to eliminate those barriers through a coherent horizontal reform, moving supervision of key market infrastructures to EU level and harmonising the regulatory framework across trading, post-trading and asset management. 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.

You can read more about the MISP in our previous insight here.

Legislative references

	Title	Reference
¹	“Master Regulation” – Proposal for a Regulation of the European Parliament and of the Council on the further development of capital market integration and supervision within the Union	COM(2025) 943 final, 2025/0383(COD)
²	“Master Directive” – Proposal for a Directive of the European Parliament and of the Council on the further development of capital market integration and supervision within the Union	COM(2025) 942 final, 2025/0382(COD)
3	“Settlement Finality Regulation” – Proposal for a Regulation of the European Parliament and of the Council on settlement finality	COM(2025) 941 final, 2025/0381(COD)
4	“Financial Collateral Directive” – Directive of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems	Directive 98/26/EC
5	“Settlement Finality Directive” – Directive of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements	Directive 2002/47/EC

At a glance: the Market Integration Package

What it is	A legislative package aimed at deepening EU capital market integration and strengthening supervisory convergence. It is comprised of three legislative proposals: a Master Regulation amending multiple existing EU capital markets regulations, a Master Directive amending existing directives (UCITS Directive, AIFMD and MiFID), and a new Settlement Finality Regulation repealing the Settlement Finality Directive and amending the Financial Collateral Directive.
The legal instruments	(1) Master Regulation (2025/0383(COD)) amending the ESMA Regulation, EMIR, MiFIR, CSDR, SFTR, CCPRRR, DLTPR, CRAR, BMR, Securitisation Regulation, EU Green Bond Regulation, ESG Ratings Regulation, MiCAR and CBDR; (2) Master Directive (2025/0382(COD)) amending UCITS Directive, AIFMD and MiFID; and (3) Settlement Finality Regulation (2025/0381(COD)) repealing Directive 98/26/EC and amending Directive 2002/47/EC on financial collateral arrangements.
Common name	“Market Integration Package” or “Market Integration and Supervision Package” (“MISP”).
Who it targets	The MISP impacts numerous stakeholders. Some stakeholders, such as the operators of trading venues, are directly impacted while others, such as investors in financial instruments, are indirectly impacted. Impacted stakeholders include trading venues, central counterparties (“CCPs”), central securities depositories (“CSDs”), crypto-asset service providers (“CASPs”), asset managers (UCITS management companies, AIFMs), investment firms, lending institutions and consumers.
Proposal date	European Commission proposals published on 4 December 2025.
Current stage	The MISP is currently under review by the Council of the EU and the European Parliament. Proposals for the MISP were published on 4 December 2025. The Council of the EU work then commenced in the Financial Services and Banking Union Working Party. In the European Parliament, ECON Committee draft reports were published on 12 June 2026 by rapporteurs Ferber (Master Regulation), Heinäluoma (Master Directive) and Crosetto (Settlement Finality Regulation). An ECON committee vote is expected in December 2026.
Key institutional lead	Commissioner Maria Luís Albuquerque (EPP / Portugal)
Key Matheson Contacts	Vincent McConnon, Brónagh Maher and John Adams

Who is impacted by the MISP?

Given the breadth of these legislative proposals, it is unsurprising that numerous stakeholders are impacted by the MISP. Some stakeholders, such as the operators of trading venues, are directly impacted while others, such as investors in financial instruments, are indirectly impacted. Those impacted include the following:

Trading venues and market infrastructure – regulated markets, multilateral trading facilities, CCPs and CSDs whose supervisory landscape would shift materially, including potential transfer of direct supervision of significant market infrastructures to ESMA;
Asset managers – UCITS management companies and AIFMs affected by amendments to the UCITS Directive and AIFMD, particularly on cross-border distribution, passporting and depositary rules;
MiFID investment firms and brokers – firms active in trading and post-trading affected by amendments to MiFIR and MiFID;
Crypto-asset service providers (“CASPs”) – subject to proposed transfer of supervisory competence from national competent authorities (“NCAs”) to ESMA under MiCAR;
Lending institutions including banks and credit unions – intended to benefit from the potential for broader capital market access for consumers;
NCAs responsible for supervision across EU Member States, whose competences would be partially transferred to ESMA in respect of significant market infrastructures and CASPs; and
European consumers and investors – intended to benefit from lower costs, greater choice and broader access to capital market investment opportunities as integration deepens.

The package has been broadly welcomed by policymakers in both the European Parliament and the Council of the EU. Work in the Council of the EU’s Financial Services and Banking Union Working Party commenced promptly after publication. In the European Parliament, ECON Committee draft reports were published on 12 June 2026, with rapporteur Ferber (Master Regulation) calling for greater ambition, rapporteur Heinäluoma (Master Directive) welcoming the measures but seeking a stronger ESMA supervisory role, and rapporteur Crosetto (Settlement Finality Regulation) welcoming the conversion of the Settlement Finality Directive into a directly applicable regulation. The real political challenge will centre on the extent of ESMA’s expanded supervisory powers and EU member State willingness to cede national supervisory competences.

What are the key legal and political challenges?

The scope of ESMA’s expanded supervisory powers is the central political tension. The proposal to transfer direct supervisory competences over significant trading venues, CCPs and CSDs, and all CASPs, to ESMA materially reduces the role of NCAs. Several EU member states are reluctant to cede national supervisory authority, even as they acknowledge the fragmentation problem that national approaches have created. The calibration of the boundary between ESMA direct supervision and NCA competence will be one of the most contested issues in both European Parliament and Council of the EU negotiations. Rapporteur Ferber has called for ESMA’s supervisory mandate to be extended even further, including the direct supervision of all EU CCPs and CSDs, not just significant ones as proposed by the European Commission.

National transposition of the Master Directive creates a risk of divergent implementation. Unlike a regulation (which applies directly), the Master Directive must be transposed by all 27 EU member states. Given the political sensitivity of key provisions, particularly on ESMA powers and cross-border fund distribution, there is a material risk that EU member states use transposition flexibility to implement the directive in ways that reflect national supervisory preferences, potentially perpetuating the very fragmentation the MISP seeks to eliminate.

The omnibus structure creates complex interaction effects. As the Master Regulation and Master Directive simultaneously amend much existing legislation (including EMIR, MiFIR, CSDR, UCITS Directive, AIFMD and MiFID), the package introduces layers of interaction between different regulatory regimes. Firms operating across multiple sectors will need to map the cumulative effect of amendments across their regulatory frameworks. Inconsistencies or gaps in how the amendments interact may only become apparent during national transposition of the Master Directive.

The proposed transfer of CASP supervision to ESMA raises transitional complexity. Under the proposed Master Regulation, supervisory competence over CASPs would transfer from NCAs to ESMA 24 months after the regulation’s entry into force. Firms with applications currently being processed by NCAs will need clarity on transitional arrangements.

DLT and tokenisation provisions must keep pace with rapidly evolving markets. The DLTPR amendments seek to encourage adoption of distributed ledger technology, but the tokenisation of financial assets is accelerating regardless of regulatory timelines. The risk is that the legislative framework, however ambitious, may already be playing catch-up with market developments by the time it is adopted.

The settlement finality framework must balance legal certainty with technological neutrality. The conversion of the Settlement Finality Directive into a directly applicable Regulation aims to harmonise definitions and settlement finality moments across EU member states. However, achieving genuine technology neutrality to accommodate DLT-based recording and tokenised instruments alongside conventional market infrastructure is a significant regulatory design challenge. Rapporteur Crosetto has proposed amendments to ensure the framework is technology-neutral and operationally workable.

The ESMA governance reform will face scrutiny. The European Commission proposes a new Executive Board for ESMA. Rapporteur Ferber has proposed that this Executive Board have five independent members with double voting rights in the Board of Supervisors, a significant governance change that EU member states may resist due to concerns regarding reduced influence over ESMA’s institutional operation.

Frequently Asked Questions

As noted above, the MISP flows directly from the European Commission’s SIU, which identified market integration and efficient supervision as essential to strengthening EU economic competitiveness and resilience.

The European Commission’s ambition is to create a fully integrated, efficient and scaled European capital market capable of supporting investment in the EU’s strategic priorities, including the green and digital transitions, defence capabilities, and long-term economic security. Deeper integration is also intended to deliver a positive cycle: more efficient capital markets produce better returns for savers and investors, encouraging greater participation and channelling private capital towards EU growth.

What the European Commission is trying to achieve	How this is reflected in the legislative proposals / might look in practice
Remove barriers to market integration and leverage scale	Eliminating obstacles in trading, post-trading and asset management to enable market participants to operate more seamlessly across EU member states and reduce cost differences between domestic and cross-border transactions, including through the introduction of Pan-European Market Operator (“PEMO”) status and enhanced passporting for regulated markets and CSDs.
Enable integrated supervision	Transferring direct supervisory competences over significant market infrastructures (certain trading venues, CCPs and CSDs and all CASPs) to ESMA and strengthening ESMA’s coordination role in the asset management sector, supported by an expanded ESMA mandate and an Executive Board with independent members.
Facilitate innovation in digital finance	Relaxing limits under the DLTPR, increasing proportionality and flexibility and providing greater legal certainty to encourage the adoption of distributed ledger technology and support tokenisation of financial instruments.
Simplify the regulatory framework	Converting certain directives into directly applicable regulations; narrowing the scope for nationally imposed gold-plating; and streamlining Level 2 empowerments and overlapping supervisory arrangements to ease compliance burden.
Strengthen and harmonise the settlement and collateral framework	Repealing and replacing the Settlement Finality Directive with a directly applicable Regulation, amending the Financial Collateral Directive and harmonising definitions and settlement finality moments to reduce systemic risk and eliminate national interpretation divergences, including accommodation of DLT and tokenisation.
Create a competitive, globally relevant EU capital market	Supporting EU economic competitiveness in a challenging global environment by enabling deeper cross-border investment, better access to capital for businesses and improved returns for savers as well as investors.

March 2025: European Commission unveils the SIU strategy, identifying market integration and efficient supervision as core pillars and setting the policy context for the MISP.
September 2025: European Parliament endorses new legislation to improve trading and post-trading systems as well as supporting technological innovation, building momentum for the package.
4 December 2025: European Commission publishes all three legislative proposals: the Master Regulation, the Master Directive, and the Settlement Finality Regulation.
December 2025: Technical deliberations commence in the Council of the EU’s Working Party on Financial Services and Banking Union. Meanwhile, all three proposals are allocated to the ECON Committee in the European Parliament.
March 2026: European Economic and Social Committee (EESC) adopts opinion supporting the objectives and measures set out in the proposals.
12 June 2026: ECON Committee publishes draft reports on all three MISP proposals.
December 2026: ECON Committee expected to vote on negotiating position on all three MISP proposals.
2027 onwards: Political negotiations expected to conclude by early 2027 at the earliest; given complexity and broad scope, the process could stretch into 2027, with implementation potentially not taking place until 2027–2029.
nclude negotiations by the end of 2026.
July – December 2026: Irish Presidency schedules nine meetings of the Working Party on Tax Questions to discuss the proposal; two have already taken place, with early reports identifying a number of areas of disagreement between Member States.
4 September 2026: Next scheduled Council discussion on the DAC Recast.
11 December 2026: Targeted ECOFIN meeting at which the Irish Presidency aims to reach political agreement on the DAC Recast.
Following political agreement: As the central Council legal basis for this file is Article 115 TFEU, the Directive will require unanimous approval by all Member States in Council, together with consultation of the European Parliament, before formal adoption. No indicative date for formal adoption, publication in the Official Journal, or national transposition deadlines had been confirmed as at the time of writing.

Council of the EU:

Minister Simon Harris (Ireland) – took over responsibility from July 2026 under the Irish Presidency of the Council of the EU.
Working Party on Financial Services and Banking Union — technical-level deliberations.

European Commission:

Commissioner Maria Luís Albuquerque (EPP / Portugal) – responsible for leading this file through the legislative process.

European Parliament:

Economic and Monetary Affairs Committee (“ECON”) — lead committee.
Markus Ferber (EPP / Germany) – rapporteur for the Master Regulation, calling for greater ambition on market integration and a stronger ESMA supervisory mandate.
Eero Heinäluoma (S&D / Finland) – rapporteur for the Master Directive, welcoming the measures and calling for a stronger ESMA supervisory role in the asset management sector.
Giovanni Crosetto (ECR / Italy) – rapporteur for the Settlement Finality Regulation.

The MISP is at a relatively early stage of the ordinary legislative procedure, having entered European Parliament committee work in mid-2026. Negotiations are expected to be complex and politically contested, particularly on the scope of ESMA’s supervisory powers. However, given the scale and ambition of the reforms, firms with material exposure to EU capital markets should begin monitoring and preparing now. The following points are most relevant:

Map your regulatory footprint against the proposed changes. The MISP simultaneously amends a large number of existing EU legislative instruments across trading, post-trading, asset management and digital finance. Firms operating across multiple sectors (eg, investment firms that are also fund managers or that are active in crypto-assets) will need to assess the cumulative impact on their existing regulatory frameworks and licences. All stakeholders need to assess the MISP package carefully with a view to considering what changes may be necessary to their business models, policies and processes – while recognising that the final legislative text is not yet confirmed.
Assess the supervisory implications of the proposed ESMA powers. If the proposed transfer of supervisory competence over significant trading venues, CCPs and CSDs, and all CASPs, to ESMA proceeds in anything close to the proposed form, the practical supervisory relationship for affected firms will change materially. Firms should assess which of their activities or entities may fall within ESMA’s proposed direct supervisory perimeter and what that means for their current NCA relationships.
Prepare for the CASP supervisory transition. CASPs face a proposed 24-month transition period after the regulation’s entry into force before supervisory competence formally transfers to ESMA. Firms with applications currently under assessment by NCAs should monitor the transitional provisions closely and engage with their current NCA on the implications.
Review cross-border distribution and passporting arrangements. The Master Directive and Master Regulation include significant reforms to passporting for regulated markets and CSDs, and to the cross-border distribution framework for UCITS and AIFs. Asset managers and fund operators with cross-border distribution models should assess the implications of the proposed changes, particularly the introduction of a harmonised depositary services passport and the proposed amendments to the CBDR. For more information, see here for our article discussing potential effects on UCITS and AIFs.
Assess the implications of settlement finality reform for post-trade operations. The conversion of the Settlement Finality Directive into a directly applicable Regulation and the amendments to the Financial Collateral Directive are intended to harmonise settlement finality moments and collateral definitions. Firms active in post-trade services, including those using or developing DLT-based settlement systems, should assess how the proposed changes interact with their current operations and contracts.
Engage in European Parliament and Council of the EU negotiations. The MISP is at the stage where engagement with rapporteurs, the ECON Committee and Council of the EU working party positions can still materially influence the final text. Firms with a material stake in specific provisions, particularly on ESMA supervisory powers, CASP supervision, DLT and settlement finality, should consider engaging at EU level either directly or through industry representative bodies during the legislative process rather than waiting for final text.
Monitor national transposition of the Master Directive. As with all EU directives, the Master Directive will require transposition by each of the 27 EU member states. Given the political sensitivity of certain provisions and the risk of divergent national implementation, firms with cross-border operations should monitor transposition proposals in each relevant jurisdiction, as national implementing measures may vary in ways that affect their business models.
Track Level 2 implementing work from ESMA. Key provisions of the MISP, including the new ESMA supervisory powers and the technical standards underpinning the settlement finality framework, will be operationalised through regulatory and implementing technical standards from ESMA. The timeline and content of that implementing work will be critical for compliance planning.

The MISP should be understood as one of the principal legislative vehicles for delivering the Commission’s Savings and Investments Union (“SIU”) agenda. The SIU strategy, published in March 2025, is structured around four interconnected pillars: citizens and saving; investments and financing; market integration and scale; and efficient supervision. The MISP directly targets the latter two pillars.

The MISP and the SIU are mutually reinforcing. The MISP addresses the structural and supervisory infrastructure conditions: barriers to cross-border trading, post-trading and asset management, the fragmentation of national supervisory frameworks, and the legal certainty needed for innovation in digital finance. The SIU’s broader retail-facing agenda (including the Retail Investment Strategy) provides the investor-facing protective framework, ensuring that when retail investors engage with deeper capital markets, they do so on fair and well-regulated terms. The two agendas are therefore interdependent and should be monitored in parallel.

In particular, any MISP provisions that expand passporting for investment funds, harmonise cross-border distribution rules or extend ESMA’s supervisory perimeter interact directly with the rules governing access to capital markets products under the Retail Investment Strategy and wider SIU initiatives. Developments in either agenda will have implications for the other, and firms operating across both retail and institutional market segments will need to monitor both tracks.

Acronym	Meaning
AIF	Alternative Investment Fund
AIFM	Alternative Investment Fund Manager
AIFMD	Alternative Investment Fund Managers Directive
BMR	Benchmark Regulation
CASP	Crypto-Asset Service Provider
CBDR	Cross-Border Distribution of Funds Regulation
CCP	Central Counterparty
CCPRRR	Regulation on a framework for the recovery and resolution of central counterparties
CMU	Capital Markets Union
CRAR	Credit Rating Agencies Regulation
CSD	Central Securities Depository
CSDR	Central Securities Depositories Regulation
DLT	Distributed Ledger Technology
DLTPR	Distributed Ledger Technology Pilot Regulation
ECON	Economic and Monetary Affairs Committee (European Parliament)
EMIR	European Market Infrastructure Regulation
ESMA	European Securities and Markets Authority
EU	European Union
IMF	International Monetary Fund
MiCAR	Markets in Crypto-Assets Regulation
MiFID	Markets in Financial Instruments Directive
MiFIR	Markets in Financial Instruments Regulation
MISP	Market Integration and Supervision Package
NCA	National Competent Authority
PEMO	Pan-European Market Operator
SFTR	Securities Financing Transactions Regulation
SIU	Savings and Investments Union
UCITS	Undertakings for Collective Investment in Transferable Securities