New Research: Building Integrated European Capital Markets – Lessons and Outlook from a Decade of Harmonization

Europe has spent over a decade laying the regulatory foundations for a truly integrated capital market. But as policymakers accelerate the transition from the Capital Markets Union (CMU) to the Savings and Investments Union (SIU), a critical question remains: how can Europe's fragmented capital markets be transformed into an integrated platform that mobilizes capital at scale?

A new research paper authored by Dirk Loscher, Head of Custody & Investor Solutions, examines ten years of market harmonization and explores what must happen next to unlock Europe's full investment potential.

Key findings from the research

Despite significant progress through initiatives such as TARGET2-Securities (T2S), CSDR, ECMS, FASTER and MiCAR, European capital markets remain constrained by legal, tax and operational fragmentation. The paper highlights that Europe continues to underutilize approximately €10 trillion of household savings while facing an estimated annual investment gap of €750-800 billion needed to support competitiveness, digital transformation, sustainability and defense priorities.

• Strengthening Europe's settlement infrastructure: CSDR, T2S and the proposed MISP aim to improve interoperability across market infrastructures and reduce fragmentation
• Advancing legal and tax harmonization: the 28th Regime and FASTER seek to remove cross-border barriers through simplified securities law and more efficient tax relief processes
• T+1 settlement: accelerates the need for greater automation, standardization and operational efficiency
• Digital assets: the future of digital securities depends on integrating digital assets into trusted market infrastructure rather than creating parallel ecosystems

The infrastructure opportunity

While regulatory reform continues, the paper identifies a substantial opportunity available today through infrastructure consolidation. Research cited in the paper shows that a Tier 1 broker-dealer can incur approximately €37 million annually in costs linked to fragmented post-trade operations, inefficient funding structures and duplicated infrastructure relationships. Much of this cost stems from managing multiple market connections, fragmented collateral pools and complex operational processes across jurisdictions.

As Europe's largest and most advanced Pan-European CSD, Clearstream offers a practical solution to these challenges. Connecting 19 T2S markets through a single infrastructure model, major CCPs and trading venues, and processing more than 50% of T2S settlement volume, Clearstream enables market participants to access European markets through one account, one platform and one partner. This approach helps firms simplify market access, optimize collateral usage, reduce operational complexity and prepare for future industry developments, including T+1 settlement and the implementation of the Savings and Investments Union.

Conclusion and the way forward

The research concludes that while significant progress has already been made, Europe’s Savings and Investments Union (SIU) will not be achieved through regulation alone. The realization of this goal will depend on coordinated efforts across policymakers, infrastructure providers, alongside decisive action from market participants to transform ambition into sustainable economic growth.