European banks urge regulators not to intervene in the stock market and warn that tightening rules on over-the-counter trading may have unintended consequences.

European major banks urge regulators not to intervene in the stock market, stating that there is no evidence that the decrease in trading volume on traditional stock exchanges has had a detrimental effect on price formation. The Association for Financial Markets in Europe warned on Tuesday that tightening rules on over-the-counter trading could have unintended consequences, damaging market liquidity and worsening the situation for investors. The association represents banks such as Deutsche Bank, Crdit Agricole, and Santander, as well as trading firms like Citadel Securities and Jane Street. In April, the European Securities and Markets Authority (ESMA) released a research report on the stock market, suggesting that legislative or regulatory measures could be taken to curb the ongoing decline in stock trading on exchanges. ESMA stated that while the trend itself may not be concerning, if it continues, it could weaken price formation mechanisms and reduce investor confidence in benchmark prices. The following month, the six largest economies in Europe proposed measures that regulators could take to limit the growth of internal trading within investment banks and proprietary trading companies. In response, AFME warned against restricting investors' choices of trading venues and stated that any future measures should be based on evidence.