Two months after Mario Draghi urged the creation of a unified European capital market, stock exchange operator Euronext has announced future plans that will likely be music to the former ECB chief’s ears.
In his widely discussed report on European competitiveness, Draghi calls on the EU to revive its long-standing plans for a Capital Markets Union (CMU). By consolidating the fragmented capital markets in the EU, companies would become less reliant on banks, gain cheaper access to market-based financing, and thereby stimulate the economy more effectively, according to the Italian ex-premier’s reasoning.
Reducing the fragmentation of the European financial landscape is one of Euronext’s core missions, as CEO Stéphane Boujnah emphasized last week during Investor Day in Paris.
“For two reasons,” clarified the Frenchman, who stood on stage—not coincidentally—next to a European flag. “First, this fragmentation is one of the main pain points for Euronext’s clients. Second, offering unified European solutions is also profitable.”
Euronext, with the Belgian state (through its financial arm SFPIM) as one of its core shareholders, comprises seven European exchanges: Amsterdam, Brussels, Paris, Lisbon, Dublin, Oslo, and Milan. Boujnah aims to broaden the group’s services, with a Europe-wide integration initiative as the central theme. Euronext announced several initiatives towards this goal across the entire securities trading lifecycle—from pre-trade (such as IPOs) to post-trade (clearing and settlement).
ETFs
Euronext has confirmed its ambition to merge its three major ETF trading platforms— Milan, Paris, and Amsterdam—into a single European market for these trackers by 2027.
“Currently, there is fragmentation at two levels,” explained Euronext executive Anthony Attia. “First, ETF issuers must open their order books per country to reach investors in each market. Second, trading also takes place via unregulated RFQ platforms (request-for-quote) like Bloomberg or Tradeweb.”
“If we can combine Milan, Paris, and Amsterdam, we will create Europe’s largest ETF trading platform and provide a solution to fragmentation. We are, in effect, building a small-scale CMU that could serve as a model for future Euronext products.”
A section from Euronext’s presentation for investors:
Source: Euronext ETF
PrimaryBid
Euronext also aims to make it simpler and more attractive for small and medium-sized enterprises to go public. One initiative is to make IPOs more accessible to retail investors. In France, the stock exchange operator collaborates with fintech company PrimaryBid, which has enabled more than thirty SMEs to raise capital from retail investors over the past three years.
PrimaryBid is now also being rolled out in the Benelux through the online broker Bux, a part of ABN Amro. Retail investors in the Netherlands and Belgium will gain access via the app to IPOs and other regulated capital increases, including deals previously available only to institutional investors. “This new agreement marks an important step toward our shared goal of fostering retail investor participation in financial markets,” the partners say.
Post-Trade services
The Draghi report highlighted that post-trade services—the settlement and custody processes following securities trading—remain highly fragmented in Europe, in contrast to the strong centralization of these functions in the U.S.
Euronext hopes to play a larger role in this area through its Euronext Clearing and Euronext Securities services. By 2027, the exchange operator aims to establish itself as the “unique and most efficient gateway to European capital markets for listing, trading, clearing, settlement, and custody.”