21/02/2025
Europe’s equity markets are fragmented across the Union, both at the level of infrastructure, with numerous stock exchanges and trading venues, clearing houses and central security depositaries spread across Member States, and at the level of economic, tax and legal structures. Both levels must be improved in order to strengthen the system as a whole. The EFR encourages European policymakers to consider the entire ecosystem with the aim of generating real and lasting progress aimed at making the EU capital market more competitive on a global scale. Stable, recognisable and predictable policymaking is key to attracting investments.
Europe needs to lower its dependency on other regions for various value chains. This includes strengthening the European financial sector. A strong European financial sector and capital market is required to underpin European security, competitiveness, growth potential and resilience.
More equity finance plus a stronger European capital market and EU market participants form a key tool for achieving this throughout the entire market vertical (exchanges, listing, trading, clearing and settlement).
The EFR proposes recommendations for nine focus areas for driving more equity finance in Europe
- Boost institutional investor participation
- Unlock sophisticated investor participation
- Higher ratio of equity and transferable securities in European companies’ funding structures.
- Assess how the relationship between primary and secondary capital markets affects the overall attractiveness of equity markets
- Simplify and recalibrate key pieces of EU legislation to allow more risk capital
- Boost the venture capital sector
- Facilitate Sustainable investments
- Address the penalization under the current IFRS framework of investment in equity, long-term equity and equity-type instruments
- Improve Liquidity in equity capital markets