Euronext, a prominent stock exchange group, has put forth an ambitious proposal to consolidate the numerous exchange traded product (ETP) listings currently spread across its seven different bourses onto a single venue. This move, if successful, aims to streamline operations, boost liquidity, and reduce trading costs for investors. Despite the potential benefits, there is skepticism within the investor community regarding the feasibility of Euronext achieving this consolidation by its speculated target deadline in September.

With over 3,300 ETP listings distributed across exchanges in Milan, Amsterdam, Paris, Oslo, Brussels, Dublin, and Lisbon, Euronext faces challenges related to liquidity fragmentation and increased trading costs due to listings in multiple locations. The proposal to centralize all ETPs onto one exchange, possibly Amsterdam or through issuer nominations, has garnered mixed reactions from industry experts.

Nick King, head of ETF at Robeco, sees advantages in concentrating listings on a single exchange as it could enhance liquidity, reduce costs, and tighten trading spreads. Similarly, Andrew Jamieson, global head of ETF product at Citi, views Euronext’s initiative as a potential solution to address the fragmentation prevalent in local listing levels across Europe.

However, concerns have been raised about the political and regulatory hurdles that Euronext may encounter in consolidating its ETP listings. Market participants like Bruno Poulin of Ossiam express doubts about the ease of achieving this consolidation, citing national interests and regulatory complexities as potential barriers. Moreover, existing regulations in certain jurisdictions mandate local listings, adding another layer of complexity to the consolidation process.

Despite the perceived benefits of a consolidated Euronext listing venue, industry experts like Kenneth Lamont of Morningstar advocate for a broader, pan-European solution to tackle the challenges of fragmentation and illiquidity in the European ETF market. While Euronext’s consolidation plan is seen as a positive step, there are calls for a more comprehensive approach encompassing all European bourses, including the UK.

Notwithstanding the potential advantages, questions linger about the settlement process Euronext might adopt for servicing ETFs on a single exchange and the impact on asset owners. There are also concerns that Euronext might adjust its ETF listing fees to compensate for revenue loss from multiple listings. The market awaits further developments as Euronext remains committed to addressing fragmentation in the European ETF market through its strategic growth plan.