Unlocking scale and competitiveness in Europe’s markets

Brussels, 25 September 2024 – The paper examines policies and models aimed at promoting scalability and efficiencies to create a more integrated post-trade market. These efforts will boost market efficiency, reduce costs, enhance the competitiveness of European markets globally and drive innovation and growth.

After addressing the current state of Europe’s post-trade ecosystem, the paper goes on to explore how Financial Market Infrastructures (FMIs) can advance the Savings and Investment Union and what policy-makers should prioritise to facilitate integration of European capital markets, specifically in the post-trade sector.

Despite progress, the EU’s post-trade sector remains fragmented, with custody, asset servicing and tax-related processes remaining subject to diverse national approaches.

In today's evolving geopolitical landscape, strong FMIs are increasingly crucial. The international reach and competitiveness of Europe's International Central Securities Depositories (ICSD) model is vital for projecting the EU and the euro on the global stage, especially as resilient infrastructures become more essential in times of volatility.

Also initiatives like TARGET2-Securties (T2S), common platforms between CSDs, legal consolidation as demonstrated by Euroclear Bank's role in Ireland and market-level integration in areas such as the Eurobond market, which benefits from the ICSDs' infrastructure have all advanced integration.

The EU already possesses strong market infrastructures capable of supporting further integration and enhancing European competitiveness on the global stage. However, advancing post-trade integration requires concerted efforts from Member States, EU authorities and market participants. For Euroclear, the key steps include:

• addressing any remaining legal or practical barrier to CSD competition, particularly in equities, to facilitate efficient cross-border services
• encouraging market participants to consider pan-European solutions that can enhance integration and efficiency at the infrastructure level, such as the Eurobond model
• converging national frameworks and market practices
• prioritising efforts to attract issuers to EU markets and deepen investment capital pools

The digital transition presents opportunities to create a more integrated European market environment. Technologies such as Distributed Ledger Technology (DLT) and digital asset securities have the potential to enhance productivity and market access. However, it is essential to establish appropriate regulatory foundations to avoid fragmentation.

Euroclear is convinced that progress in these areas will further integrate and provide increased scale of the EU's capital market. By working together, Member States, EU authorities and market participants can build a resilient, competitive and unified post-trade environment that supports European competitiveness globally.

Valérie Urbain, Euroclear CEO, said: "The release of this whitepaper underscores our commitment to fostering meaningful dialogue within the market we support. While significant strides have been made towards integration, especially through initiatives such as T2S and success stories such as Eurobonds, persistent legal and national disparities continue to hinder full cohesion. To truly unlock the potential of the EU’s single market, we must encourage further alignment of market practices across Europe, embrace technology-driven efficiencies and provide an environment that balances robust regulation with innovation. As we navigate geopolitical shifts and digital transformations, our focus must remain on building a robust, integrated financial landscape, collaborating with all stakeholders to strengthen and advance the capital market."

Euroclear group is the financial industry’s trusted provider of post trade services. Guided by its purpose, Euroclear innovates to bring safety, efficiency and connections to financial markets for sustainable economic growth. Euroclear provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives and investment funds. As a proven, resilient capital market infrastructure, Euroclear is committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise. The Euroclear group comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden, Euroclear UK & International.