From fragmentation to scale: EU’s SIU and Market Integration and Supervision Package set the stage for financial infrastructure deals

For years, Europe has faced the same structural challenge: plenty of savings, but capital markets that remain shallow, fragmented, and unable to match the scale of the US or other major economies. In 2025, the European Commission finally set out a plan to address this. The Savings and Investments Union (SIU) strategy, supported by the Market Integration and Supervision Package (MISP), aims to create a single EU-wide capital market by standardising rules, strengthening supervision, and making cross-border access easier. 

For industry players these reforms could catalyse consolidation – particularly among stock exchanges, trading platforms, clearing and settlement systems, and asset-servicing providers. For dealmakers, although many of the SIU’s core measures, including the MISP, will not take effect for several years, they provide a clearer and more predictable pathway to M&A across EU financial market infrastructure.

Why the SIU and MISP matter for M&A

The proposed MISP, comprises a “master” regulation and directive updating key frameworks – MiFIR, EMIR, CSDR, MiCA, the DLT Pilot, UCITS/AIFMD – alongside a proposal to replace the Settlement Finality Directive with a new Settlement Finality Regulation (SFR) to esablish consistent settlement rules across the EU. Two core objectives are to: (1) simplify cross-border trading and settlement; and (2) strengthen EU-level supervision by giving ESMA more direct authority over major market infrastructures and crypto-asset service providers. 

These reforms make scale more economically attractive. As regulatory fragmentation declines and supervisory clarity increases, the relative benefits of consolidation rise, reinforcing incentives for mergers.

Key features of the proposals

• Trading & post‑trading integration. Enhanced passporting for regulated markets and CSDs, combined with the introduction of a Pan-European Market Operator (PEMO) status, would allow a single entity to operate multiple venues under one license. This simplifies corporate structures and facilitates cross-border combinations. 

• Supervisory centralisation. Shifting oversight of significant market infrastructures to ESMA could reduce the risk of M&A deals becoming entangled in multiple, potentially conflicting, national regulatory approval procedures. 

• Tech enablement. Relaxation of constraints within the DLT Pilot and introduction of a tech-neutral settlement regime would reduce legal uncertainty for digital post-trade models, expanding the pool of potential acquisition targets, including digital CSDs and tokenisation platforms.

Implications for stock exchanges

For exchange groups, the reforms present an opportunity to improve efficiency and competitiveness. Policy changes can pave the way for restructuring and consolidation where management sees a viable route to a larger, more unified market. 

A single rulebook and simplified passporting reduce the cost and complexity of operating trading venues across Member States. This makes cross-border M&A more attractive, as operators can share technology, market data, and compliance systems instead of duplicating them. Where ESMA acts as a centralised supervisor, even highly complex objectives such as single order books and other forms of liquidity consolidation could become achievable. 

These reforms may also simplify licensing in multiple venue acquisitions, allowing integration efforts to focus more on unifying tech, data, and rulebook alignment rather than regulatory hurdles.

Clearing, settlement and asset‑servicing: the next frontier

The transition from the SFD to a harmonised SFR would create a single settlement rulebook across the EU. This clarity – particularly for non-bank payment providers and DLT-based systems – removes a significant legal obstacle to cross-border operations. 

As a result CSDs, CCPs, and custody providers would be better positioned to scale while Europe's current patchwork of national systems creates strong structural drivers for consolidation. Future deals are likely to focus on shared technology platforms, better collateral mobility, and giving clients one access point for multiple countries. 

An improving macro-M&A backdrop

The macro environment for M&A is also improving. Pent-up demand, stabilising interest rates, and improving confidence are supporting deal activity, particularly for larger strategic transactions, albeit against a still uneven and risk‑sensitive backdrop. Bain & Company reported a 36% increase in global deal value in 2025 and expects momentum to continue into 2026.

For exchanges and FMIs, these conditions often unlock long-discussed mergers that need strong equity markets and financing. Importantly, SIU and the MISP align consolidation with EU policy objectives – deeper liquidity, lower costs and more efficient capital flows – helping to secure political backing for transactions that might otherwise encounter national resistance.

How investors can position 

• Exchanges and market data: Large exchange groups with credible cross-border plans are likely to benefit most. Passporting and PEMO status make multi-venue ownership easier. Targets with strong market data and tech stacks – like trading engines and surveillance – should command valuation premiums. Bolt-ons in niche areas such as SME boards or sustainability-linked listings remain attractive. 

• Clearing, settlement, and custody: A harmonised SFR’s increases the value of pan-EU client access and collateral networks. Platforms experimenting with tokenised collateral or automated corporate actions could become prime acquisition targets where incumbents prefer to buy rather than build. 

• Digital issuance and DLT infrastructure:  DLT Pilot reforms should make it easier to launch digital CSDs, tokenisation platforms, and on-chain settlement. Expect established FMIs to acquire digital infrastructure providers to accelerate their digital rollout, especially where blockchain can cut cross-border friction. 

• Integration without full M&A: Where full mergers remain politically sensitive, firms are creating value through partnerships like shared services, joint data ventures, or interoperability hubs. MISP’s open-access and passporting rules should enable these models to scale more quickly. 

Risks and challenges

Giving ESMA more power could speed up cross-border operations, but its broad mandate and lack of extra resources could slow approvals. Exchange ownership remains politically sensitive - even with passporting and PEMO status, big “flagship” mergers will still require careful handling. 

The Commission’s narrative – competitiveness, scale, and less fragmentation – will be key to winning support. At the same time deal activity is concentrating in fewer, larger transactions increasing execution risk. Integrating trading technology and post-trade systems across borders is complex and requires early and detailed planning.

Geopolitical risk – particularly ongoing tensions in the Middle East – is an additional wildcard. Ongoing instability could affect valuations, delay interest-rate easing, and complicate deal structuring through new sanctions and requires geopolitical scenario planning. At the same time, heightened geopolitical risk may reinforce the EU’s determination to strengthen its capital markets as a strategic priority.

The 2026 “wave of M&A”: starting to unfold

Put the pieces together and a credible 2026 scenario is emerging. Exchanges groups are increasingly pursuing both vertical integration in post-trade and horizontal expansion across trading venues. Deutsche Börse’s agreed €5.3bn acquisition of Allfunds – expanding its reach into fund distribution, data and wealth infrastructure –  illustrates a broader shift toward building pan‑European multi-service market infrastructure platforms. 

Peers are responding – some defensively, by locking in partnerships; others offensively, by testing larger combinations while financing conditions and equity markets remain broadly supportive. In parallel, post-trade providers are expanding into adjacent areas such as settlement and clearing in order to improve movement of collateral and broaden their access to clients; and digital issuance and tokenisation capabilities are increasingly bought, not built.

Merger control is still a key factor for deals in the FMI space with the Commission having taken a cautious approach to consolidation to date. However, the EU’s focus on its competitiveness agenda and the proposed reforms of its merger guidelines mean that the Commission is likely to look more carefully at how FMI consolidation may benefit European financial markets.

What’s happening next?

• MISP trilogue expected to run through H2 2026: Ongoing negotiations between the Parliament and Council – particularly around PEMO status, ESMA powers, and SFR scope – will determine the level of certainty available to boards considering major transactions.

• Exchange group capital allocation signals: Half-year and full-year results in 2026 will provide important indications of M&A appetite, particularly in post-trade and data businesses. 

• DLT Pilot graduations: Projects graduating from the DLT Pilot Regime are becoming live catalysts for capability acquisitions by FMI operators seeking to accelerate their digital infrastructure. 

• Political momentum: The broader EU competitiveness agenda – reflected in the Draghi report on European competitiveness and subsequent Commission priorities – continues to support consolidation that reduces fragmentation and strengthens Europe's global position

The SIU and the MISP will not guarantee consolidation, but they do intend to raise the returns to scale, reduce cross‑border frictions, and clarify the rules of the road. That combination is typically what moves selective high-value European market‑infrastructure M&A from planning to reality. If 2025 was about writing the rulebook, 2026 is beginning to test it in execution.