Reimagining European Capital Markets
Reimagining European Capital Markets - From Fragmentation to Harmonization
Download Reimagining European Capital MarketsEurope has the chance to reposition itself as an attractive destination for investment and innovation even as it grapples with geopolitical uncertainty and macroeconomic volatility.
The region’s capital markets infrastructure consists of an array of often unconnected trading venues, clearing houses, settlement systems, central counterparties
and data and technology providers – all of which are fragmented across the various countries in the region. This disjointedness has implications for capital
formation, liquidity, costs and efficiency.
This Citi GPS report identifies gaps in the infrastructure ecosystem and highlights steps to unlock an integrated capital market in Europe through harmonizing post-trade processes.
Key Takeaways
European capital markets suffer from significant fragmentation in post-trade processes, issuance and listings. 63% of our 4Q25 survey respondents cite significant gaps in regulation, policy, taxation and operational processes which need to be addressed. Only 7% believe most barriers to harmonization have been addressed.
The capital market fragmentation in Europe has contributed to a capital formation gap. Between 2020 and 2025, the value of IPOs in EU was 0.6% as a percentage of GDP compared with 2.1% for the U.S.1,2 The proportion of European IPOs listing in the U.S. has tripled since 2015 to 22% of all IPOs by European companies by value3.
50% of respondents cite the high number of financial market infrastructures (FMIs) in Europe as a key factor driving capital markets fragmentation creating complexity and reinforcing national laws instead of a single market. Reducing the number of central securities depositories to fewer than 10 from 30+ today could bring price efficiency and help create a single market structure.
43% of survey respondents cite legal and regulatory inconsistency as one of the primary drivers for capital markets fragmentation. The shift from divergent directives to consistent regulations, alongside eliminating redundant due diligence could potentially unlock billions of euros in annual investments and boost GDP by 1.5% over 10 years4.
40% of survey respondents say that high and opaque cost structures contribute to the fragmentation of Europe’s capital markets, reflecting domestic monopolies and a lack ofcompetition. Average settlement costs are 30-300% higher and safekeeping costs 160-500% higher than in the U.S.
Tokenization has a role to play in harmonization. About 36% of survey respondents agree that tokenization could boost efficiency via automated, real-time processes, better collateral mobility and liquidity, and unified data on shared ledgers.
1 AFME, Equity Primary Markets and Trading Report 4Q24 & 3Q25, 10 December 2025
2 Renaissance Capital, 2025 IPO Market Stats, 26 December 2025
3 New Financial – Rethinking Capital Markets, A reality check on international listings, April 2025
4 CEPR, The Economic Impact of European Capital Market Integration, 22 September 2025