The competitiveness and attractiveness of EU capital markets are generally assessed in terms of their depth, liquidity, integration and ability to provide adequate access to market-based financing for companies and investment opportunities for investors. While certain segments, notably bond markets, are well developed, EU capital markets overall remain less deep and liquid than in other major jurisdictions, notably the US, and continue to play a more limited role in the financing of corporates and the allocation of household savings. This reflects persistent regulatory and supervisory fragmentation across Member States, low levels of IPO activity and equity financing, and a large share of savings still held in bank deposits rather than invested in capital market instruments.

A number of reforms have been implemented in recent years to improve the functioning and competitiveness of EU capital markets. In the trading space, the MiFIR review, adopted in 2023, introduces measures to enhance market transparency and price formation, notably through the phased implementation of consolidated tapes and adjustments to market structure and transparency rules. In the post-trading space, the transition to T+1 settlement is expected to improve efficiency and automation, while EMIR 3 aims, inter alia, to enhance the competitiveness of EU clearing markets by improving authorisation processes and strengthening supervisory coordination.

Looking ahead, the Market Integration and Supervision Package (MISP) aims to address remaining sources of fragmentation and inefficiency. Building on T2S and earlier securities market reforms, the package sets out measures to improve passporting regimes, introduce the right to designate any CSD for settlement, strengthen connectivity between market infrastructures, including through the mandatory connection of EU CSDs to T2S, and enhance EU-level supervision of significant cross-border entities.
Technological developments are also expected to play an increasing role in shaping the competitiveness of EU capital markets. DLT and tokenisation have the potential to improve efficiency, transparency and integration across the trading and post-trading value chain, supported by Eurosystem initiatives such as the Pontes and Appia projects, as well as market-led initiatives to develop DLT-based platforms.