Digital Transformation: The Missing Piece in Europe's Capital Markets Strategy

Bloomberg's recent analysis of Europe's IPO market reveals a concerning trend: Europe's share of global IPO volumes has fallen to just 8% in 2025, down from a decade average of 16%. This decline isn't merely cyclical—it reflects structural challenges requiring bold solutions.

Beyond Regulatory Reform: The Technology Imperative

For years, European policymakers have focused on regulatory harmonization through the Capital Markets Union. While these efforts are necessary, they're insufficient alone. The fundamental limitation lies in our market infrastructure—today's electronic systems were never designed for proper digital integration. They're essentially digitized versions of analog processes, not natively digital systems.

It's not possible to create truly digital markets by simply connecting legacy electronic systems that inherited analog limitations. True transformation requires reimagining market infrastructure from the ground up.

The Infrastructure Upgrade Imperative

Continuing to invest in pre-21st-century infrastructure is a strategic error. History shows that leapfrogging competition has always been driven by technological advancement, not regulatory changes alone. The countries and regions that gain a competitive advantage are those willing to embrace new technological paradigms rather than incrementally improving outdated systems.

Just as mobile-first economies in Asia leapfrogged Western markets by skipping landline infrastructure, Europe has the opportunity to leapfrog competitors by building natively digital capital markets rather than continuing to patch electronic systems designed for a different era.

How Digital Technologies Can Revitalize European Markets

Digital technologies offer transformative potential to address Europe's capital market challenges:

Unified Market Access: Digital infrastructure can unify fragmented regional markets into a single cohesive marketplace while respecting local regulations. This would dramatically increase liquidity and visibility across the entire European market.

24/7 Global Trading: While the digital economy operates continuously worldwide, European markets remain constrained by limited trading hours. Digital technologies can enable round-the-clock market access, meeting the modern expectations of investors.

Radical Cost Reduction: By eliminating redundant infrastructure and streamlining processes, digital technologies can significantly reduce system costs. These savings would make European markets more attractive to both issuers and investors.

Enhanced Liquidity Efficiency: Europe has substantial trading volumes, but this liquidity remains fragmented and often invisible. Digital infrastructure can consolidate liquidity pools and improve market quality for all participants.

The Path Forward

The exciting reality is that Europe doesn't need to wait for complete regulatory alignment across all member states. The MiCAR framework already provides the foundation needed to extend and unify European trading venues into one digital market today.

Every day Europe waits for "perfect" regulatory conditions, we fall further behind global competitors. With MiCAR and current digital technologies, we can create a digital Capital Markets Union now while regulatory harmonization continues in parallel.

At Digital Marks (https://digital-marks.com), we're working to make this vision a reality by building the digital infrastructure that complements existing regulatory frameworks, allowing Europe to compete globally without waiting for years of additional negotiations.