Ambition and some missing links in the market integration package

Calls for a “paradigm shift”[1] in capital market integration have been central in recent debates[2] on the Savings and Investments Union. Against this background, in 2025 the European Commission unveiled an ambitious legislative proposal: the Market Integration Package, which pursues full harmonisation with directly applicable regulations and centralises supervision by ESMA over “significant” market infrastructure (trading venues, CCPs and CSDs).

Distinctively, in seeking to deepen liquidity in European capital markets, the proposal goes beyond creating a mere level playing field and moves towards active market design. This shift is particularly visible in post-trading, which has long been at the core of integration debates. With mandatory links between CSDs and TARGET2-Securities, the package promotes emergence of a new public-private network infrastructure centred on the ECB. In this respect, it resembles the 1970s US integration path, which led to the creation of the DTCC as a piece of unified post-trading infrastructure with coordinated action by industry and authorities, while deliberately avoiding the imposition of a single monopolistic structure and allowing concentration to emerge through market dynamics.

The package nevertheless makes selective integration choices. It addresses some structural issues while leaving aside others that may prove decisive for its effectiveness. Three issues are particularly relevant.

First, market infrastructure is subject to deep harmonisation and increasingly centralised supervision, while intervention on asset managers remains limited to a light CMU-style framework. This departs from recent debates in which asset managers played a more central role, and contrasts with the US experience, in which they were already supervised at the federal level before consolidation of post-trading infrastructure. Persisting fragmentation in this market segment could hinder the scaling-up of funds and weaken the link between demand and supply. Asset managers are the primary channel through which household savings are mobilised into public markets and they play an even more critical role in private markets, where liquidity is not intermediated by trading venues. Nevertheless, this sector is among the most integrated in the EU financial markets, given the concentration of fund domiciliation in a limited number of jurisdictions and extensive cross-border distribution. An infrastructure-centred reform is therefore not per se problematic. The remaining question is whether, in the absence of a more robust intervention, the current asset management market can adequately support demand-side integration alongside the other measures envisaged in the broader SIU agenda.

Second, a further relevant design choice concerns the review of the DLT Pilot Regime. The reform opens certain post-trading services to crypto-asset service providers with blockchain expertise, with the aim of accelerating technological development, and introduces a new instrument: industry groups tasked with setting standards to ensure interoperability. However, in the absence of mandatory linkages, coordination among DLT-based post-trading platforms is largely left to voluntary arrangements and to ECB-led initiatives, which may lack adequate mechanisms to ensure private-sector participation. Therefore, without more robust public intervention, interoperability may fail to translate into effective integration, with the risk that sufficient scale will not be achieved and that technical capabilities – particularly those brought by DLT-native entrants to incumbent post-trading players – will not be adequately shared, thereby hampering the rapid and effective development of the infrastructure.

Third, national regimes, particularly in property and securities law, remain largely untouched despite their significant impact on post-trading and their renewed prominence in recent debates. This is against the background of past harmonisation attempts such as those envisaged by, among others, the Giovannini Report and the Legal Certainty Advice Group. Progress therefore appears to depend on coordinated action by Member States, for example through the adoption of a European analogue to Article 8 of the UCC. Without such bottom-up convergence, the full benefits of market integration may remain out of reach.

[1] See Beck-Novembre, CMU 3.0: time for a paradigm change?, link

[2] DG Trésor, Developing European capital markets to finance the future, link