Tapping into the full potential of EU Capital Markets

Solving monopoly issues in the EU Capital Market Infrastructure can boost EU GDP by at least EUR 52 billion over the next decade, corresponding to 0.3% of GDP in 2024.

An Implement Consulting Group study commissioned by Finance Denmark analyses the growth potential lost due to monopoly issues in the EU Capital Market Infrastructure and explores how new regulation can address these issues to unlock the growth potential.

Key findings of the study:

• Capital Market Infrastructure companies (trading venues, CCPs and CSDs) have been allowed to evolve into powerful for-profit monopolies unlike infrastructure companies in other sectors.
• This development has led to significant inefficiencies in the Capital Markets and higher costs for both issuers and investors.
• By effectively addressing the monopoly characteristics of the Capital Market Infrastructure, the cost of capital for EU companies could be reduced by at least 0.16 percentage points. This would support a 0.09 percentage point increase in EU investment rate and is estimated to raise EU GDP by EUR 52 billion.
• To realise the economic potential, the EU policy makers must tackle the underlying issues and introduce a future-fit regulation that incentivise the Capital Market Infrastructure companies to behave as if they were subject to effective and well-functioning competition.