European Commission Announces Legislative Package to Advance EU Financial Market Integration

On 4 December 2025, the European Commission (EC) released a comprehensive package of measures aimed at removing barriers and enhancing the integration, efficiency, and competitiveness of European Union (EU) financial markets (the Package). This initiative is a key element of the Savings and Investments Union (SIU) strategy and is intended to establish a genuinely integrated single market for financial services.

Background 

The EC’s initiative responds to longstanding calls from the European Council and European Parliament to strengthen the EU’s economic resilience and international standing by creating unified capital markets accessible to all Member States (MS). The Package follows the Council’s March 2025 request for action on market oversight and fragmentation, and Parliament’s September 2025 endorsement of new legislation to improve trading and post-trading systems and support technological innovation. 

Key Measures

The Package introduces a range of reforms designed to address persistent fragmentation and inefficiencies in EU financial markets, which remain notably less competitive than global counterparts. Such proposed measures include:

• Elimination of Barriers to Market Integration: The proposals aim to target obstacles in trading, post-trading, and asset management, enabling market participants to operate more seamlessly across MS. According to the EC, these changes are intended to reduce cost disparities between domestic and cross‑border transactions.
• Enhanced Passporting and Pan-European Market Operator Status: The Package seeks to improve passporting opportunities for regulated markets and Central Securities Depositories (CSDs) and introduces a new ‘Pan-European Market Operator’ status. In the EC’s view, the proposals would, if adopted, enable operators of trading venues to consolidate corporate structures and licenses into a single entity or license, streamlining cross-border operations.
• Facilitation of Innovation: Regulatory barriers to the adoption of distributed ledger technology (DLT) are addressed through amendments to the DLT Pilot Regulation, which relax limits, increase proportionality and flexibility, and provide greater legal certainty. These changes are intended to encourage technological innovation within the financial sector.
• Supervisory Framework Enhancements: The Package proposes transferring direct supervisory responsibilities for significant market infrastructures – including certain trading venues, Central Counterparties, CSDs, and all Crypto-Asset Service Providers – to the European Securities and Markets Authority (ESMA). ESMA’s coordination role in the asset management sector will also be strengthened, with the aim of harmonising supervision and supporting cross-border activities.
• Regulatory Simplification and Burden Reduction: Building on previous SIU measures, the Package aims to further simplify the capital markets framework. To do so, it will convert certain directives into regulations, streamline Level 2 empowerments (the authority granted to the EC to adopt regulatory and implementing standards that supplement Level 1 EU laws), and reduce national options and discretions to prevent ‘regulatory gold‑plating’ (where MS add requirements beyond EU legislation).

Next Steps 

The proposed measures will now be subject to negotiation and approval by the European Council and European Parliament. Political negotiations are expected to conclude by early 2027, with any resulting changes expected to take effect later that year. 

The EC’s press release of the Package is available here.