VIDEO | The need for greater efficiency and consolidation within European markets took centre stage at the “Stock Exchanges CEO Panel” during the PostTrade 360 Nordic 2024 conference. Øivind Amundsen, CEO of Euronext Oslo Børs, Roland Chai, president of European Markets at Nasdaq, and moderator Kristian Gårder, co-head Equities at SEB, discussed the pressing challenges facing the post-trade sector. They highlighted the need to streamline and consolidate processes to overcome the fragmentation of trading and settlement systems across Europe, aiming to improve market efficiency and reduce costs.

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Amundsen opened by addressing the ongoing challenges with the securities value chain. “We still see fragmented CSDs around Europe with old systems and different market models,” he remarked, highlighting how trading has modernised but settlement and custody processes lag behind. He stressed that a streamlined approach is essential for lowering costs and improving services.

Chai supported this view, particularly when it comes to cross-border operations. “For us, it’s about making it easy for investors and corporate issuers to list and bring products to European exchanges,” Chai explained, noting that the current complexity of CSDs presents a significant barrier. He called for more interoperable and open CSD structures to simplify market access.

Amundsen added that the fragmented post-trade landscape in the Nordics, with multiple CSDs and clearinghouses, makes it even more difficult. “In the future, there will be pressure for consolidation in the Nordics,” he said, pointing to the role of technology and standardisation in reducing costs for market participants.

Liquidity

Liquidity was another key theme of the discussion. Chai highlighted Euronext’s focus on creating a unified European liquidity pool, which combines liquidity from seven stock exchanges, allowing smaller markets like Dublin to thrive. “Lowering the cost and complexity will ultimately bring liquidity to the region,” he emphasised. This system has enabled Oslo to become a global hub for shipping companies, even surpassing New York.

However, the fragmented nature of the Nordics poses challenges for exchange-traded funds (ETFs), which have yet to gain significant traction. A unified settlement system across the region could unlock the potential of ETFs, overcoming the complications of multiple currencies and settlement systems.

T+0

As Europe prepares to transition from T+2 to T+1 settlement by 2026, the speakers stressed the importance of addressing the risks, particularly for smaller markets. Moving toward T+0 (real-time settlement) remains a long-term goal, though it requires substantial liquidity and capital. The focus should remain on improving efficiency, reducing costs, and creating a competitive market environment that supports growth.

“I think this sums it up well”, concludes Gårder, “if we could simplify and condense the landscape, it would reduce costs, benefit the end customer, and hopefully attract liquidity back. As you both mentioned, this could help maintain and even increase activity in the Nordics and Europe. Looking at Europe as a whole makes sense, as its size could make it a substantial counterpart to the US.”

• The consolidated PostTrade 360° Nordic conference, in Stockholm on 4–5 September 2024, came to host 1,200+ delegates and featured 70 sessions.
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