CMU – Daunting dream to practical reality

How do we create a truly European capital market that is accessible and works for all? How do we support the capital and funding needs of small member states, large member states, retail investors, professional investors, pensions, banks, private companies, public companies, your family, and my family and finance a green transition while we are at it? How can we continue to develop and enhance an entire capital markets system - on every front - in order to better the lives of all Europeans and support their financial independence?

There is no single answer. However, important strides have already been made in many areas which serve as the building blocks of more efficient and integrated capital markets that are attractive to investors and issuers alike.

The equities consolidated tape will be a great leap forward for European markets when it is introduced from 2026. The consolidated tape will democratise access to market data and give more European and international investors greater visibility to European companies via a single access point.

Competition, pricing and risk management via EMIR 3.0 reaffirmed the importance of interoperability of equities clearing, which places the needs of market participants first, and brings significant operational and capital efficiencies to the benefit of the end investor.

Put more simply, it enables firms to mobilise more of their capital into growing their businesses, furthering the development of the capital market as a whole.

The EU Listing Act also simplifies the listing process to make it easier and more cost effective to raise capital in European markets.

These are foundational elements on which much can be built, and at Cboe Europe we can speak from experience.

Our philosophy mirrors the EU Capital Markets Union, and the pan-European approach we have taken to all of our services enhances their attractiveness and the competitiveness of European markets as a whole. Through this approach we have galvanized the support of market participants and succeeded in building one of the largest pan-European stock exchanges and the most connected pan-European CCP. More recently, we have invested in the development of a pan-European equity derivatives exchange (CEDX) and will soon launch a corporate listings initiative designed to attract global capital to European markets. 

As a longstanding supporter of the CMU, pan-European solutions, and meaningful legislative enhancements (e.g., consolidated tape and interoperability in equites clearing) that benefit investors, Cboe Europe remains open and committed to exploring enhancements that will grow European markets through choice and competition.

In our experience, investors are naturally drawn to capital markets that are efficient, accessible, driven to innovate, and incentivized to reduce suboptimal, high-cost outcomes. If we pursue supervisory frameworks – centralised or not – that support efficient product approval processes, encourage innovation, and allow for the principles-based application of rules, we will have a solid foundation. If we pursue an ecosystem that supports competition (beneficial fragmentation) through openness and interoperability – rather than unproductive fragmentation or uncompetitive silos that are driven by rules, infrastructures and service providers that avoid pan-European solutions and sever Pan-European networks – we can build a CMU that embraces connections and reduces inefficiencies. If we pursue an ecosystem that rewards competitive infrastructures rather than national silos, we can build a CMU that improves outcomes for all.

Cboe embodies a pan-European approach rather than a country-by-country approach in the belief that it helps simplify access to European markets, reduces unproductive fragmentation, while improving capital efficiencies and reducing costs for investors, to the benefit of issuers in large and small markets.

As new ideas are proposed, we encourage policymakers to consider a simple rubric; does the idea/provision/legislative text support competition and innovation? Does the proposal support the ability of investors to make informed decisions? Does the proposal reduce bureaucracy and encourage dynamism? Does the proposal improve retail investor access to transparent investment products? Will it make it easier for a company to raise initial or additional capital in public markets?

If the answer to any of these questions is ‘no’ we encourage policymakers to strongly consider whether the proposal is fit for purpose. We must not lose sight of the core tenets at the heart of these questions; competition, innovation, and customer choice. Markets that support these principles empower and attract investors. These are the tenets on which the future CMU can be built.

This article originally appeared in The EUROFI Magazine, here.