Project

For more than a decade, the European Union has set its sights on building a genuine Capital Markets Union (CMU). The vision is clear: integrated financial markets that channel savings across borders, strengthen investor confidence, and help Europe compete on the global stage. Yet despite ambitious declarations and countless legislative initiatives, progress has been halting. Fragmentation persists, legal uncertainty undermines trust, and capital often flows less freely across Europe’s borders than policymakers intend. While the EU’s banking union has advanced in measurable ways, the CMU remains incomplete. The question is not whether the EU needs deeper and more liquid capital markets, but how to create them.

One obstacle lies in the structure of EU capital markets law. Today, regulation is scattered across a patchwork of so-called Single Rulebooks: the Market Abuse Regulation (MAR), the Prospectus Regulation (PR), the Transparency Directive (TD), the Short Selling Regulation (SSR), and others. Each has its own logic, terminology, and enforcement framework. Developed piecemeal, these instruments lack overarching coordination. The result is duplication, inconsistency, and complexity—a burden on issuers, intermediaries, and investors alike. For companies, this translates into high compliance costs and barriers to raising capital. For investors, it creates uncertainty and discourages cross-border engagement.

The research project on a European Capital Markets Code (ECMC), led by Rüdiger Veil and conducted by a group of 27 researchers from 12 European countries, and supported by the German Research Foundation (Deutsche Forschungsgemeinschaft, DFG), proposes a response. Codification offers a pragmatic way to overcome fragmentation. By integrating the acquis into a single, coherent legal framework, the ECMC would reduce interpretative uncertainty, enhance transparency, and lower transaction costs. More than that, it would provide the EU with a legislative and operational blueprint—a foundation for a modern, competitive CMU. Beyond that, the ECMC contributes to the broader objectives of the Savings and Investments Union (SIU) by creating a coherent legal framework that facilitates the mobilisation of savings and promotes cross-border investment.

Codification is not an end in itself. It is a means of aligning Europe’s financial framework with broader political and economic goals. By clarifying foundational principles—proportionality, materiality, investor confidence, and fair market conduct—the ECMC could support a more predictable application of the law. Courts and supervisory authorities would benefit from greater coherence in enforcement. Lawmakers would gain a structured framework for targeted reforms. Market participants would benefit from dealing with one transparent set of obligations rather than a patchwork of divergent rules.

Importantly, codification is also an opportunity to modernize. The ECMC could embed innovative concepts such as an “IPO on-ramp” or proportionate regimes for SMEs, giving smaller firms easier access to public capital markets. This would not only broaden financing options for growth companies but also help diversify Europe’s economic base. Similarly, codification would allow for the integration of sustainability considerations, aligning disclosure obligations with the principles of double materiality and the EU’s ESG agenda. By connecting financial transparency with long-term capital allocation, the ECMC reflects the reality that Europe’s future competitiveness hinges on sustainable investment.

Some critics may argue that codification is too ambitious or politically unrealistic. Yet the alternative—continuing with fragmented, overlapping, and sometimes contradictory regimes—is no longer tenable. As the Letta and Draghi reports both stress, Europe cannot achieve its strategic objectives with a half-built CMU. Legal uncertainty erodes investor confidence, while duplication wastes resources. With global competition for capital intensifying, inaction has become a costly choice.

There are, of course, important considerations that need to be taken into account when pursuing codification. Member States may wish to preserve the degree of national flexibility that still exists within the current architecture of European capital markets law. Industry stakeholders, too, carefully assess any proposed changes to the regulatory framework. At the same time, our experience in presenting the ECMC project has shown that the advantages of codification are readily recognised by both policymakers and market participants. In particular, stakeholders appreciate the prospect of greater clarity, consistency, and accessibility of the law, as well as the reduction of unnecessary complexity and compliance costs. Similar considerations have increasingly found support at the political level, where the idea of a European Capital Markets Code has attracted growing attention as a means of strengthening the Capital Markets Union. These developments demonstrate that codification is a practical response to the challenges facing European capital markets. Europe should therefore seize the opportunity to equip itself with a regulatory framework capable of supporting its economic and geopolitical ambitions.

Indeed, codification is not a technocratic exercise but a political one. The CMU is part of a broader European project to deepen integration, enhance resilience, and assert autonomy in a volatile global order. The coming years will be decisive. The EU can continue patching the system with incremental reforms, or it can seize the opportunity to build a coherent, future-oriented code. The ECMC is not a panacea, but it offers a credible path toward completing the CMU. What is needed is political will—the recognition that only by unifying its capital markets framework can Europe unlock the full potential of its savings and investments.

In this light, the ECMC project deserves close attention from policymakers, regulators, and market participants alike. It is not simply an academic proposal but a contribution to Europe’s strategic debate on how to finance its future. The EU has called for a more unified, competitive, and investment-friendly environment. Codification provides a credible answer to that challenge.

Since its launch in 2021, the project has already resulted in two book publications with Oxford University Press, and the Research Group is expected to present a draft European Capital Markets Code in autumn 2026. This ongoing work illustrates in concrete terms the feasibility and practical advantages of codifying European capital markets law.