Euronext backs German push for single European stock exchange

Pan-European banal speech Euronext has welcomed nan thought of much consolidated European superior markets to boost nan continent's competitiveness.

Euronext’s CEO, Stéphane Boujnah, reacted to German Chancellor Friedrich Merz' endorsement of a azygous European Stock Exchange.

“Euronext is fresh to lend to nan adjacent level of consolidation of markets successful Europe to create a deeper liquidity excavation to finance nan maturation of European companies,” Boujnah told Euronews.

The CEO said he welcomed Chancellor Friedrich Merz' telephone for “deeper and much charismatic European superior markets and for much consolidation successful nan markets infrastructure sector, yet benefitting European companies”.

Euronext represents much than 1,700 companies pinch a mixed marketplace capitalisation of astir €6.5 trillion.

Support from Germany and France

Boujnah was reacting to comments made by CDU leader Merz successful nan Bundestag connected Thursday.

“We request a benignant of European Stock Exchange truthful that successful companies for illustration BioNTech from Germany don't person to spell nationalist connected nan New York Stock Exchange," said nan chancellor.

The imagination of a deeper and much integrated European Capital Markets Union (CMU) — partially designed to supply start-ups pinch easy entree to a ample excavation of superior — has been a decade successful nan making. Critics of nan existent European set-up opportunity that fragmentation hinders scaling, pushing companies to time off Europe for US exchanges.

Progress connected nan CMU Action Plan has agelong been hindered by structural and governmental barriers, though momentum has precocious started to build. In part, this is because Frankfurt and Paris person taken significant, coordinated steps to accelerate this long-awaited project.

However, 1 of nan awesome obstacles to nan CMU lies successful fragmented regularisation and supervision crossed personnel states.

“Therefore, we request a decisive move towards azygous supervision wrong nan European Securities and Markets Authority (ESMA),” Boujnah said.

Merz' reside fuelled hopes that Europe’s largest system is genuinely changing its tune, arsenic Germany has truthful acold been hesitant to manus complete supervisory licences to ESMA.

By nan extremity of this year, nan European Commission is expected to array proposals for a supervisory model for definite financial institutions. These see cardinal securities depositories, trading venues, and crypto exchanges.

According to ESMA, raising nan supervision of a mini group of institutions to nan EU level could "enhance efficiencies" and "provide a much holistic overview of nan risks".

A spokesperson told Euronews Business that nan database includes "pan-European marketplace infrastructures" including banal exchanges, arsenic good arsenic caller sectors, for example, crypto-asset work providers.

Europe's competitiveness

According to Euronext, greater integration of superior markets could unlock nan afloat imaginable of nan European Union’s €13tn successful backstage savings.

And arsenic good arsenic boosting financing for companies, greater harmonisation has nan imaginable to trim regulatory fragmentation and trim compliance costs.

Many experts accent that Europe’s strategical competitiveness is connected nan line, particularly arsenic it seeks to support up pinch nan US and China.

On respective occasions, European companies person decided to move overseas to use from heavy US banal markets. Just this year, Sweden's Klarna, pinch a marketplace worth of €11.5bn, pursued and completed a US IPO. Another Swedish company, Heart Aerospace, besides relocated its firm office and halfway operations to Los Angeles earlier this twelvemonth to summation entree to US investors.

Companies successful Europe are looking for precocious liquidity and easy-to-access superior to grow. They often get higher valuations overseas and simpler regulatory environments.

How realistic is simply a azygous European banal exchange?

Despite nan imaginable benefits, location are galore reasons experts are cautious astir nan logistics of a azygous banal exchange.

Jérémie Peloso, main European strategist astatine BCA Research, said: “I don’t deliberation it would lick nan deficiency of liquidity and extent successful European markets, nor nan absence of IPOs (at slightest compared pinch Asia and nan US).”

“Assuming nan European banal speech is brought to life, we would spot listed companies successful nationalist markets (DAX, CAC, IBEX, etc) having to determine whether to database astatine nan nationalist aliases astatine nan European level. As for overseas nationalist companies, I besides spot constricted attractiveness,” he added.

Meanwhile, important obstacles stay for a azygous European banal exchange, specified arsenic nationalist competition, existent differences successful regulation, and nan request to manus supervisory powerfulness to 1 entity.

Member states are reluctant to springiness up power complete their ain markets, including supervision of exchanges. Some personnel states, including Luxembourg and Cyprus, hastily voiced their concerns astir accrued costs and regulatory load from a caller centralised EU authority.

Overcoming obstacles now depends connected leaders specified arsenic Friedrich Merz. But merging disparate markets successful nan European Union, each holding their ain traditions, languages, and consequence tolerances, remains a monumental task.