Euronext, the stock exchange group, has put forth an ambitious plan to consolidate its numerous exchange traded product (ETP) listings from seven different bourses onto a single venue. This proposal aims to enhance liquidity, reduce trading costs, and ultimately benefit investors by streamlining the trading process.

Despite the potential advantages of this consolidation plan, skepticism looms over its feasibility, especially considering the intricate political landscape surrounding national stock exchanges. With over 3,300 ETP listings scattered across various Euronext exchanges such as Milan, Amsterdam, Paris, Oslo, Brussels, Dublin, and Lisbon, the current setup leads to liquidity dilution, wider trading spreads, and increased costs for investors.

Euronext is currently engaging in dialogues with market participants to explore the possibility of centralizing all ETPs onto one exchange, possibly by relocating all listings to Amsterdam or allowing ETP issuers to designate a preferred exchange. While industry experts like Nick King, head of ETF at Robeco, acknowledge the potential benefits of consolidating listings onto a single exchange, concerns persist regarding the practicality of overcoming political and regulatory obstacles.

The initiative has received mixed reactions from market players. Andrew Jamieson, global head of ETF product at Citi, views Euronext’s proposal as an intriguing concept that could address the issue of fragmentation in local listing practices. However, some industry insiders, including Bruno Poulin, CEO of Ossiam, express doubts about the challenges posed by national interests and regulatory requirements in certain jurisdictions like Germany and Switzerland, where local listings are mandated.

While Euronext’s move towards consolidation is perceived as a positive step by Kenneth Lamont, principal of research at Morningstar, he emphasizes the need for a broader, pan-European solution to tackle the fragmentation and illiquidity prevalent in the European ETF market. The success of Euronext’s plan would not only depend on navigating political hurdles but also on devising an effective settlement process and addressing potential concerns about fee adjustments.

Although Euronext has refrained from providing detailed comments on the consolidation plan, the company’s strategic vision emphasizes the importance of addressing market fragmentation to unlock growth potential in the European ETF market. While the road ahead may be challenging, the industry awaits further developments to see if Euronext can successfully navigate the complexities of consolidating ETF trading venues amidst the existing political and regulatory landscape.