Q&A Document: Europe's Capital Market Boost – Insights from our CEO's Editorials

Introduction: This Q&A document delves into the critical arguments presented in our CEO, Stephan Leithner's, recent guest editorials. It highlights the urgent need and strategic path for transforming European capital markets to foster growth, enhance competitiveness, and secure future prosperity.

• Q: What is the primary call to action from Deutsche Börse Group regarding European capital markets?
  • A:The primary call to action is for Europe to take "big steps forward now, hand in hand" to achieve a capital market boost. Deutsche Börse Group expresses its deep conviction that Europe needs a unified and strong capital market for the benefit of all citizens. The organization is ready to lead the transformation of the markets but emphasizes the need for a collective action plan to translate political intent into realities.

• Q: What are the main challenges currently facing European capital markets, according to the editorials?
  • A: Europe's capital markets remain a "patchwork quilt" of hundreds of mostly non-transparent platforms, divided by national boundaries and regulatory fragmentation. This fragmentation is identified as a strategic vulnerability, leading to higher costs and intransparency for European investors and issuers, unlike global competitors (especially in the US) who markets remain a "patchwork quilt" of hundreds of mostly non-transparent platforms, divided by national boundaries and regulatory fragmentation**. This fragmentation is identified as a strategic vulnerability, leading to higher costs and intransparency for European investors and issuers, unlike global competitors (especially in the US) who benefit from harmonized, liquid, and transparent markets at scale. There is also a funding gap for growth and IPOs, with liquidity often trapped in non-transparent venues.

• Q: What specific measures does Stephan Leithner propose to deepen Europe's capital markets?
  • A: To deepen capital markets, Stephan Leithner proposes structural initiatives across all 27 member states to strengthen the usage of capital markets in their pension systems. This involves moving savings from bank accounts to productive and return-generating investments. He also suggests replicating the successes of countries like Sweden and the Netherlands, which have built solid foundations for future-proof pension systems and gained deep liquidity for IPOs and company transformations. A coalition of the ambitious and responsible, powered by a Franco-German engine, is needed to drive this change.

• Q: How can Europe address the fragmentation and lack of transparency in its capital markets?
  • ​​​​​​​A: Europe must urgently reverse the long-term trend of liquidity getting trapped in non-transparent venues. This means taking effective steps to increase the share of volumes handled in transparent reference markets in Europe to over 50 percent, mirroring the situation in the US. What is truly needed is the genuine harmonisation of capital market rules and equal treatment of trading platforms to weave Europe’s fragmented markets into a single, resilient fabric. This also involves correcting regulations that cause fragmentation, particularly those related to dark pools, and potentially adjusting European competition law to enable market infrastructures to achieve economies of scale and global competitiveness.

• Q: What is Deutsche Börse Group's role in leading this transformation?
  • ​​​​​​​A: Deutsche Börse Group positions itself as a leading European provider of financial market infrastructure, ready to lead the transformation of the markets. The Group has already demonstrated vertical integration of various components of financial infrastructure, creating a globally competitive ecosystem that covers the entire value chain—from indices and trading across multiple asset classes (equities, bonds, funds/ETFs, derivatives) to clearing, settlement, and data. With more than 10,000 "Capital Markets Engineers" in Europe, including 6,000 outside Germany, Deutsche Börse Group asserts itself as a truly pan-European player with an integrated ecosystem to address Europe's major economic challenges.

• Q: How does the CEO, Stephan Leithner, view the existing proposals from the EU Commission regarding capital market integration?
  • ​​​​​​​A: Stephan Leithner explicitly states that the EU Commission's proposals "do not address this topic adequately" and "gehen dafür nicht weit genug" (do not go far enough). He implies that the proposals are insufficient for achieving the genuine harmonization and integration required to overcome fragmentation.

• Q: What kind of partnerships and innovation are essential to achieve a unified European capital market?
  • ​​​​​​​A: Stephan Leithner stresses the need for "common progress through partnerships" involving customers, technology providers, and public sector actors like the European Central Bank. He also calls for digital innovations from the private sector to gain global relevance, supported by Europe-wide rules that reward these innovations. Ultimately, a decisive acceleration is needed, driven by a strong coalition of Member States, with a European regulatory framework that channels liquidity and savings toward innovative and productive investments.

• Q: What are the potential benefits of a unified and deep European capital market?
  • ​​​​​​​A: A unified and strong capital market would benefit all European citizens. It would lead to a future-proof pension system, deep liquidity for IPOs and company transformations, and create strong tailwinds for market deepening. Furthermore, it would strengthen Europe's autonomy, enable startups to grow into "Global Champions," and ensure Europe remains globally competitive. Ultimately, it aims to achieve the liquidity, efficiency, and innovation leadership necessary to foster renewed economic growth, broader prosperity, and global competitiveness.

• Q: Is the merger of public equity markets a necessary step for the consolidation and integration of European capital markets?
  • ​​​​​​​A: No, Stephan Leithner clarifies that it "would be simplistic and misleading to assume that the consolidation and integration of European capital markets depend on the merger of public equity markets." He states that true consolidation and integration come from organic growth or company mergers, and that to increase liquidity, the regulations causing fragmentation (especially regarding dark pools) must first be corrected.