Capital markets in Central and South-Eastern Europe (CSEE) are currently fragmented and poorly interconnected. This situation limits their development and reduces the ability of companies to raise capital for growth and innovation. At the same time, a well-functioning capital market is one of the fundamental pillars of economic development, especially for small and medium-sized enterprises, which form the backbone of the economies in the region.
The impetus for change came from the European Bank for Reconstruction and Development (EBRD), which decided to actively address the fragmentation of capital markets in the CSEE region. The EBRD initiated cooperation between regional stock exchanges that have long faced similar challenges – a low number of new issuers and limited interest from large international investors.
A significant milestone was the signing of the Memorandum of Understanding in November 2024. With this step, representatives of seven stock exchanges from Central and South-Eastern Europe, including the Bratislava Stock Exchange, together with the EBRD, declared their interest in deepening cooperation and supporting the development of regional capital markets. The common goal is to create better conditions for financing growth and innovation, expand opportunities for companies to raise capital, simplify cross-border trading and increase investor participation. Ultimately, the initiative should also contribute to the growth of household wealth.
Zdroj foto: www.hanfa.hr
The ambition of the participating exchanges is also the joint reclassification of markets within the MSCI indices – from the current status of unclassified, separate or frontier markets to a single development market. Such a step would open the door to a significantly larger volume of global capital. The culmination of regional integration is to be the creation of a common regional index.
Government cooperation is also an important pillar of the initiative. In August 2025, the finance ministers and senior officials of the finance ministries of the CSEE region signed their own Memorandum of Understanding. In it, they committed to supporting the emergence of deeper and more efficient capital markets and declared their readiness to consider the necessary regulatory changes. At the same time, they stressed that the development of regional markets is closely linked to the development of the European regulatory framework and EU initiatives in the field of capital market infrastructure.
However, a real interconnection of exchanges also requires technical and infrastructure solutions. Central depositories and central counterparties from the CSEE region play a key role in this process. They are currently working on a model for the settlement of cross-border securities transactions, which must take into account settlement in both euro and national currencies, the functioning of the TARGET2-Securities platform, as well as settlement outside this platform, and which must build on an agreed model for cooperation between exchanges. The aim is to create a system that allows investors to easily invest, hold and settle trades without unnecessary barriers – as if it were one integrated region.
The entire initiative is in line with the strategic objectives of the European Union, in particular with the concept of the Savings and Investment Union. Its ambition is to redirect household savings and private capital to capital markets, support investment – in particular in small and medium-sized enterprises – improve cross-border capital flows and build a deeper, more liquid and more resilient capital market across the EU.
Author: Dagmar Kopuncová
