German Chancellor Friedrich Merz has expressed his support for the creation of a single pan-European stock exchange in order to deliver a more unified European market and address issues around fragmentation.
Friedrich Merz
Specifically, Merz cited the benefits a single exchange could bring, such as deeper liquidity and greater investor interest in the region to bolster Europe’s position as a competitive player in the global markets.
Speaking to the Bundestag on Thursday, Merz highlighted that a single European stock exchange is key to ensuring that successful companies (such as German biotech firms) are not obliged to list on the New York Stock Exchange, ensuring that value creation from German and European research remains in Europe.
He added that such companies require sufficiently broad and deep capital markets – in order to finance themselves not only better but also faster.
The news indicates German support for a unified European market and follows recent interest in creating a less fragmented European landscape across the industry.
Notably, Stéphane Boujnah, chief executive of Euronext, expressed his support for Merz’ remarks, commenting in an official statement: “I welcome Chancellor Friedrich Merz’ call for deeper and more attractive European capital markets and for more consolidation in the markets infrastructure sector, ultimately benefitting European companies.
“Euronext has always been driven by the strong conviction that in Europe it’s always possible to succeed together rather than fail separately. Euronext is ready to contribute to the next level of consolidation of markets in Europe to create a deeper liquidity pool to finance the growth of European companies.”
Recently, Euronext has made clear its intent to deliver a consolidated offering for unified markets across Europe, and in October, launched an exchange offer to acquire all ATHEX shares If successful, the move would integrate Greece into Euronext’s model which also spans companies listed in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris.
Although many across the industry recognise that a single European stock exchange would bring many benefits to the region, the challenges and cost of doing so have also not gone unnoticed by many.
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Speaking to The TRADE about the market structure implications of Merz’ comments, Sylvain Thieullent, chief executive of Horizon Trading Solution, said: “A single European stock exchange is an exciting vision. One deep pool of liquidity, lower trading costs, and stronger global visibility for European companies. Europe’s exchanges all operate on different infrastructures, with their own rulebooks, tick sizes, and market practices.
“Harmonising all that would take time and close collaboration between market participants and technology providers. But if the political will is there, the payoff could be significant. “
With calls for unifying Europe’s markets now beginning to come from both industry players and governments, the European landscape is set to be one to watch over the next few months and years.