Europe's Financial Markets are at a Crossroads: Can Exchanges Handle the Pressure? The financial industry is calling on European exchanges to step up their game when it comes to managing trading outages. But here's where it gets controversial - some argue that the current protocols are not enough to mitigate the risks associated with increasingly complex and automated markets. On September 10, 2025, leading financial industry associations representing European exchange participants laid out key principles for effective outage management, emphasizing that while outages are unavoidable, their impact can be minimized with robust and transparent procedures.
A coalition of influential financial industry associations, including the Association for Financial Markets in Europe (AFME), the European Funds and Management Association (EFAMA), and the FIA European Principal Traders Association (FIA EPTA), is urging European exchanges to fully implement outage protocols following a series of significant trading disruptions since 2020. These disruptions have threatened the orderly functioning of equity markets, raising concerns among investors and issuers alike. The associations acknowledge that as markets become increasingly reliant on electronic trading and automation, outages are an unfortunate reality. However, they stress that the impact of these outages can and must be minimized through consistent and transparent procedures.
Regulators and market participants have made significant strides in recent years to establish clear standards for managing outages. Notable milestones include the ESMA Final Report on Market Outages (May 2023), the FCA Policy Statement on Improving Equity Secondary Markets (May 2023), and the Plato Partnership Proposed Standards (November 2024). While exchanges have broadly committed to aligning their procedures with these regulatory and industry-driven initiatives, the associations warn that the true test lies in the execution. Recent incidents have exposed gaps in adherence, resulting in confusion, unnecessary risk, and further disruption for investors and issuers. The most recent outage in July 2025 serves as a stark reminder of the potentially far-reaching consequences of trading interruptions for investors, markets, and the broader economy.
To foster more resilient markets, the associations have outlined four key principles for effective outage management:
- Clarity on Order Status: Exchanges must provide accurate and consistent information on market status, instrument prices, orders, and trades, with a clear 'outage/closed' status to avoid misleading participants. This is crucial in maintaining transparency and preventing unnecessary confusion.
- Regular Updates: Exchanges should communicate at least every 15 minutes during an outage, simultaneously to all participants, and in machine-readable formats that can be seamlessly integrated into trading systems. This ensures that all stakeholders are on the same page and can react accordingly.
- Reopening Procedures: Reopening times should be communicated at least 15 minutes in advance on 'round' time increments, following prior consultation with participants. Exchanges should also consider purging the order book if necessary to maintain market integrity.
- Closing Auctions: Exchanges should provide 30 minutes' notice on whether a closing auction will be held, with clear fallback arrangements in place to provide closing prices if systems remain down. This helps maintain orderly markets and provides investors with the necessary clarity.
The associations emphasize that confidence in Europe's capital markets hinges on transparency and reliability. By adhering to established outage protocols, exchanges can safeguard investor trust, maintain orderly markets, and support Europe's competitiveness. But here's the question - are the current protocols sufficient, or is it time for a more radical overhaul? We invite you to share your thoughts on this critical issue in the comments below. Do you agree that the proposed principles are enough to mitigate the risks associated with trading outages, or do you think a more comprehensive approach is needed?
