Equity Markets Forum

Building a Credible European Equity Market

By Jacques Putzeys, Co-founder and Former CEO of EASDAQ (later Nasdaq Europe)

January 19,2025

Introduction

Despite decades of economic integration, Europe still lacks a truly unified equity market. This overview discusses the ongoing need for an integrated platform that transcends national borders and stimulates capital formation for high-growth companies. To illustrate both the potential and the hurdles of such an endeavor, we revisit the creation of EASDAQ—a private venture backed by European stakeholders, with strategic support from NASDAQ in the United States. EASDAQ’s story offers key insights into the lessons learned and the persistent challenges surrounding cross-border coordination, unified standards, and collaborative policymaking in Europe’s financial landscape.Technology companies are the most affected by the absence of a Nasdaq solution in Europe and are therefore the biggest stakeholders in the creation of a European solution. Organisations and networks of high tech companies should ideally be part of an initiative to create a sound European IPO solution.

Over the next decade, technologies such as AI and quantum computing will reshape society at a pace rivaling the Industrial Revolution—but much faster. The United States currently leads in AI, aided by substantial funding from advanced financial instruments and NASDAQ. The most decisive factor for successful funding is investor confidence and access to cross-border trading tools. If Europe intends to catch up and potentially lead, immediate action is vital—particularly regarding the establishment of a credible, cross-border, and highly standardized equity market. Such a robust environment would attract global participation, support economic growth, and bolster Europe’s ability to foster global technology leaders.

Today, most dominant tech companies are publicly listed, often on NASDAQ. Europe lacks a comparable public market, making the development of one a top priority for EU policymakers to finance the digital revolution, drive economic progress, and secure autonomy over Europe’s future. A prime example of the power of public markets is Elon Musk’s success story.

Easdaq

Easdaq emerged in the 1990s as an ambitious attempt to create a European counterpart to Nasdaq, largely driven by the European Venture Capital Association (EVCA). At the time, Europe’s capital markets were highly fragmented, with disparate accounting standards, minimal quarterly reporting, and weak corporate governance frameworks. Several pre–MiFID EU directives on admissions, listing particulars, public offers, and investment services provided the legal foundation to introduce a single English-language prospectus and enable cross-border trading under a unified regulatory framework.

Within three years, over 60 companies listed on EASDAQ, including some with dual listings on Nasdaq. Although EASDAQ ultimately faced structural and political hurdles, its story shows that a European cross border Nasdaq is possible if sufficientl funding, aligned standards, and broad stakeholder participation.

Elon Musk and the Role of a Robust Stock Market

Elon Musk’s rise to prominence in technology and innovation is often credited to his relentless entrepreneurial spirit, yet an overlooked factor is his adept use of public equity markets. From PayPal’s early days to Tesla’s massive fundraising rounds, the stock market has been a crucial pillar of Musk’s ambitions.

PayPal: When eBay acquired PayPal for about $1.5 billion in 2002, eBay’s status as a publicly traded NASDAQ company expedited the deal. Musk, PayPal’s largest shareholder, then used part of his windfall to fund future ventures.

Tesla: Publicly listed on NASDAQ since 2010, Tesla has tapped into billions of dollars from investors worldwide, fueling its technological advancements and manufacturing growth. Multiple equity and debt offerings—often in convertible notes—helped transform Tesla from a niche electric sports car startup into one of the most valuable carmakers globally.

SpaceX: Although it remains private, SpaceX benefits indirectly from Musk’s liquidity in public equities; by selling Tesla shares, he has financed much of SpaceX’s pioneering rocket development. Musk’s 2022 purchase of Twitter (now X) also relied on similar financial engineering, partly supported by proceeds from selling publicly listed Tesla shares.

A dynamic and credible equity market like NASDAQ allowed Musk to convert innovative ideas into large-scale ventures, whether accelerating Tesla’s global expansion or pursuing interplanetary travel via SpaceX. His story shows how a robust stock exchange can empower entrepreneurs to redefine entire industries.

Why Nasdaq Constitutes a Credible and Dynamic Equity Market

Investing in NASDAQ-listed companies is generally more straightforward due to its unified and transparent regulatory framework overseen by the U.S. Securities and Exchange Commission (SEC). NASDAQ attracts a diverse global investor base, ensuring strong liquidity and fair price discovery. A single set of listing rules, reporting standards, and governance requirements promotes consistency and investor protection. The use of English as the primary language and adherence to U.S. GAAP further lowers barriers for international participants. This high level of market participation underpins significant depth and stability, signaling that listed companies meet rigorous financial and governance criteria—bolstering credibility among both institutional and retail investors.

The Negative Impact of Fragmentation on Investor Confidence

In Europe, there are currently 35 listing exchanges and 18 central clearing houses, versus only three exchanges and one clearing house in the U.S. Despite this proliferation, the EU represents merely 11% of global market capitalization, while the U.S. accounts for 43%. Investors in Europe face multiple languages, listing requirements, and regulatory frameworks across numerous exchanges—eroding confidence and complicating cross-border trading. Many national exchanges have introduced specialized segments for technology companies, but these often have lighter regulation and operate as Multilateral Trading Facilities (MTFs) rather than fully regulated markets.

Euronext Growth vs. NASDAQ Capital Market

Euronext Growth and the US NASDAQ Capital Market

both cater to growth-stage companies seeking more flexible public listings. However, while Euronext Growth suits European SMEs under a lighter regulatory framework, the NASDAQ Capital Market—fully regulated under SEC oversight—offers broader global exposure and tends to inspire greater investor confidence. The classification of Euronext Growth as an MTF, rather than a regulated market, underscores the gap in regulatory rigor and international appeal compared to the NASDAQ Capital Market.

In conclusion, Europe urgently needs a cohesive, standardized equity market that can match the global reach and regulatory clarity of NASDAQ. Whether Europe can rise to the challenge remains to be seen, but examples like Elon Musk’s success—and the earlier lessons from EASDAQ—highlight the indispensable role of strong public markets in propelling innovation and securing a competitive edge in the rapidly evolving digital economy

Nasdaq Stockholm

Nasdaq Stockholm exists but seems to restrict itself to Sweden while its regulation ,IPO rules and trading could be a basis for a European presence .Quote of its CEO : "With 160 years of history Nasdaq Stockholm stands as the cornerstone of Sweden's financial ecosystem, leading the way in taking SMEs public and boasting the highest historical returns globally"It could be worthwhile exploring why, especially since the organisation of the market and its regulation matches the Nasdaq standards

Jacques Putzeys, Co-founder and Former CEO of EASDAQ (later Nasdaq Europe)

January 19,2025

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