European Commission proposes measures to tackle market barriers
08 December 2025 Europe
Image: Andrzej/stock.adobe.com
The European Commission (EC) has proposed a number of measures designed to remove barriers and unlock the full potential of the EU single market for financial services.
It forms a central component of the Savings and Investments Union (SIU) strategy, aiming to create a more integrated, efficient, and competitive financial system.
According to the EC, deeper integration of financial markets is not an end, but a means to create a single market for financial services greater than the sum of its national parts.
Simplified access to capital markets reduces costs and makes the markets more appealing for investors and companies across all Member States, irrespective of size.
Despite recent progress, EU financial markets remain significantly fragmented, small, and lack competitiveness, missing out on potential economies of scale and efficiency gains.
In 2024, the market capitalisation of stock exchanges amounted to 73 per cent of EU GDP, compared to 270 per cent in the US.
Financial institutions still face varying requirements and practices across Member States, says the EC, hindering cross-border operations and restricting opportunities for both citizens and businesses, negatively impacting the economy and the EU's competitiveness.
Measures
The package of measures come in the form of four key components: removing obstacles to market integration and leveraging scale; facilitating innovation; streamlining and enhancing supervision; simplification and burden reduction.
The first looks to remove obstacles to market integration and leveraging scale, and aims to eliminate barriers to integration in trading, post-trading, and asset management.
To achieve this, the EC proposes to enhance passporting opportunities for regulated markets and central securities depositories (CSDs), and streamline the cross-border distribution of investment funds (UCITS and AIFs) in the Union.
In addition, the EC will introduce Pan-European Market Operator (PEMO) status for operators of trading venues to streamline corporate structures and licenses into a single entity or single license format.
In terms of facilitating innovation, this package will focus on removing regulatory barriers to innovation related to distributed ledger technology (DLT).
It adapts the regulatory framework to support these technologies and amends the DLT Pilot Regulation (DLTPR) to relax limits, increase proportionality and flexibility, and provide legal certainty, therefore encouraging the adoption of new technologies in the financial sector.
For streamlining and enhancing supervision, the EC proposes transferring direct supervisory competences over significant market infrastructures such as certain trading venues, central counterparties, CSDs, and all Crypto-Asset Service Providers to the European Securities and Markets Authority (ESMA) and enhancing ESMA's coordination role for the asset management sector.
Lastly, for simplification and burden reduction, the package will simplify the capital markets framework further by converting directives into regulations, streamlining level 2 empowerments, and reducing national options and discretions to prevent gold-plating.
Maria Lu铆s Albuquerque, Commissioner for Financial Services and the Savings and Investments Union, says: 鈥淔or too long, Europe has tolerated a level of fragmentation that holds back our economy. We are making a deliberate choice to change course.
鈥淏y building a real single financial market, we will give people better opportunities to grow their wealth, and we unlock stronger financing for Europe鈥檚 priorities.
鈥淢arket integration is not a technical exercise 鈥� it is a political imperative for Europe鈥檚 prosperity and global relevance.鈥�
Looking forward, the proposals must now be negotiated and approved by the European Parliament and the Council.
According to the Commission, these components are interconnected and form a cohesive set of reforms essential for establishing 鈥渁 genuine single market鈥� across the entire investment chain, and therefore the unity of the package is crucial.
It forms a central component of the Savings and Investments Union (SIU) strategy, aiming to create a more integrated, efficient, and competitive financial system.
According to the EC, deeper integration of financial markets is not an end, but a means to create a single market for financial services greater than the sum of its national parts.
Simplified access to capital markets reduces costs and makes the markets more appealing for investors and companies across all Member States, irrespective of size.
Despite recent progress, EU financial markets remain significantly fragmented, small, and lack competitiveness, missing out on potential economies of scale and efficiency gains.
In 2024, the market capitalisation of stock exchanges amounted to 73 per cent of EU GDP, compared to 270 per cent in the US.
Financial institutions still face varying requirements and practices across Member States, says the EC, hindering cross-border operations and restricting opportunities for both citizens and businesses, negatively impacting the economy and the EU's competitiveness.
Measures
The package of measures come in the form of four key components: removing obstacles to market integration and leveraging scale; facilitating innovation; streamlining and enhancing supervision; simplification and burden reduction.
The first looks to remove obstacles to market integration and leveraging scale, and aims to eliminate barriers to integration in trading, post-trading, and asset management.
To achieve this, the EC proposes to enhance passporting opportunities for regulated markets and central securities depositories (CSDs), and streamline the cross-border distribution of investment funds (UCITS and AIFs) in the Union.
In addition, the EC will introduce Pan-European Market Operator (PEMO) status for operators of trading venues to streamline corporate structures and licenses into a single entity or single license format.
In terms of facilitating innovation, this package will focus on removing regulatory barriers to innovation related to distributed ledger technology (DLT).
It adapts the regulatory framework to support these technologies and amends the DLT Pilot Regulation (DLTPR) to relax limits, increase proportionality and flexibility, and provide legal certainty, therefore encouraging the adoption of new technologies in the financial sector.
For streamlining and enhancing supervision, the EC proposes transferring direct supervisory competences over significant market infrastructures such as certain trading venues, central counterparties, CSDs, and all Crypto-Asset Service Providers to the European Securities and Markets Authority (ESMA) and enhancing ESMA's coordination role for the asset management sector.
Lastly, for simplification and burden reduction, the package will simplify the capital markets framework further by converting directives into regulations, streamlining level 2 empowerments, and reducing national options and discretions to prevent gold-plating.
Maria Lu铆s Albuquerque, Commissioner for Financial Services and the Savings and Investments Union, says: 鈥淔or too long, Europe has tolerated a level of fragmentation that holds back our economy. We are making a deliberate choice to change course.
鈥淏y building a real single financial market, we will give people better opportunities to grow their wealth, and we unlock stronger financing for Europe鈥檚 priorities.
鈥淢arket integration is not a technical exercise 鈥� it is a political imperative for Europe鈥檚 prosperity and global relevance.鈥�
Looking forward, the proposals must now be negotiated and approved by the European Parliament and the Council.
According to the Commission, these components are interconnected and form a cohesive set of reforms essential for establishing 鈥渁 genuine single market鈥� across the entire investment chain, and therefore the unity of the package is crucial.
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