European Stock Exchanges: Tokenized Stocks Disrupt an Already Fragmented Market

About thirty exchanges for a single internal market. Europe has been pondering for years how to retain the savings of its citizens and attract American managers tired of their indices' overexposure to tech stocks. The answer appears in all reports: fewer trading venues, but larger ones.

While this project progresses at the pace of negotiations between capitals, tokenized American stocks are already being traded from Paris, Berlin, or Madrid, twenty-four hours a day, on rails indifferent to national borders.

Key Points

• The European Union has about thirty trading venues and around twenty central depositories, compared to a single depository in the United States.
• €300 billion of European savings leave every year for foreign markets, mainly American.
• MiCA offers a portable crypto license across the 27 member states, while stocks remain trapped in national infrastructures.
• Tokenized American stocks from Robinhood, Kraken, or Gemini are already traded continuously from the European Economic Area.

Economy: Stock Market Fragmentation Costs Europe Dearly

Buying a Siemens stock in Frankfurt and then a TotalEnergies stock in Paris requires two order books, two clearing houses, and two central securities depositories, which are the registers that hold the ownership of securities and organize their delivery. The Union has about twenty of them, along with about fifteen clearing houses and thirty trading platforms.

The United States operates with a single depository, the DTCC, and a consolidated price band that displays in real-time the best available price across all trading venues. The extra cost is reflected in capital flows.

The European Commission estimates that €300 billion of the continent's savings go abroad every year, mainly across the Atlantic, while €10 trillion sits idle in deposit accounts. The Draghi report on competitiveness has indeed placed the consolidation of market infrastructures among its priorities, alongside a single supervisor inspired by the U.S. SEC, an idea that Christine Lagarde has publicly advocated since 2023.

Euronext stands out with eight markets operated from Oslo to Lisbon, all connected to a single trading platform and clearing house since the acquisition of the Athens Stock Exchange. Each new merger encounters the same political reflex: no capital is willing to see its financial center downgraded to the status of a regional branch, with jobs and prestige evaporating in the process.

American managers, however, have an objective reason to look east. The top ten capitalizations of the S&P 500 account for about 40% of the index, an unprecedented level of concentration that turns any passive allocation into a tech bet. Breaking free from this dependence requires European markets capable of absorbing institutional orders without piling on intermediaries or cross-border settlement fees, which are still several times higher than those in the United States.

![Europe has been pondering for years how to retain the savings of its citizens and attract American managers tired of their indices' overexposure to tech stocks. The answer appears in all reports: fewer trading venues, but larger ones.

While this project progresses at the pace of negotiations between capitals, tokenized American stocks are already being traded from Paris, Berlin, or Madrid, twenty-four hours a day, on rails indifferent to national borders.

Crypto: Tokenized Stocks Have Taken the Lead Over European Exchanges

The MiCA (Markets in Crypto-Assets) regulation has been granting a unique license since December 2024, valid in all 27 member states through simple passporting. A provider registered in Paris or Amsterdam serves German, Italian, or Spanish clients without any additional steps, whereas a stock listed in Milan remains dependent on a national settlement chain inherited from the 1990s.

Robinhood has thus opened trading of over 200 tokenized American stocks and ETFs to its clients in the European Economic Area, issued on Arbitrum and tradable five days a week continuously. Kraken and Bybit distribute the xStocks from Backed Finance on Solana, while Gemini has created its own catalog.

A Lithuanian saver can therefore position themselves on Nvidia on a Sunday evening, when their traditional broker imposes the New York opening hours. The Bank of Lithuania, Robinhood's regulator in the Union, has indeed requested explanations regarding the tokens backed by OpenAI and SpaceX, two unlisted companies.

Brussels had opened a legal pathway as early as 2023 with the DLT pilot regime, a sandbox allowing the trading and settlement of financial securities on blockchain. The ceilings have hindered the experiment: €6 billion in total value per infrastructure, €500 million per stock issuance, for a handful of licenses granted over three years, including that of the German 21X. ESMA has recommended raising these thresholds, deemed incompatible with any institutional volume.

The consolidated price band for European stocks, promised since the first MiFID directive in 2007, will not come into service before 2027 at best: ESMA must designate its operator, and the fourteen exchanges within the EuroCTP consortium have been preparing this file since 2023. An order on a tokenized stock, however, is resolved in a matter of seconds, whether on Sunday evening or Tuesday morning. Europe still and always faces its favorite dilemma: to regulate or to innovate.

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