Euro zone finance ministers eye stock exchange mergers, document shows

By Huw Jones

LONDON, Feb 15 (Reuters) – The European Union should consider tackling barriers that prevent stock exchanges from merging to help deepen the bloc’s capital market or risk falling behind globally, euro zone finance ministers said in a draft statement seen by Reuters.

The draft statement said the euro zone finance ministers, along with the European Central Bank and European Commission, have identified key legislative priorities for the Commission’s new five-year term that starts in the autumn.

They want to see more progress towards creating a capital markets union in the EU to help companies raise money for growth on stock and bond markets, rather than heavily depending on banks.

“If the development of European capital markets is not addressed urgently, Europe is at risk of falling behind globally in terms of competitiveness, growth, and prosperity of its citizens,” the paper said.

The United States has deep stock and bond markets that companies use to raise cash, but Europe’s markets are fragmented, with a plethora of stock exchanges that makes it difficult to create a single capital market for the region.

“We invite the European Commission to assess [and, if relevant, address] obstacles that prevent the consolidation of stock exchanges and of better integrated market infrastructure, to strengthen European centres of expertise (e.g. green bonds issuance),” the draft statement said.

The document also draws inspiration from Britain’s “Mansion House Compact” that has obtained commitments from UK-based pension funds to invest 5% of their money in UK growth companies over time.

“In this context, member states could explore, where appropriate, whether voluntary commitments from large institutional investors to invest in EU equity as part of their European portfolio could be helpful,” the paper said.