Some of the Nordic region’s biggest companies and wealthiest investors are working on a proposal to create a single, unified stock exchange.
The proposal is one idea the group, called Nordic Compass, is considering to more closely integrate the region’s capital markets, according to people familiar with the discussions.
The industry alliance, inspired by Mario Draghi’s two-year-old report on European competitiveness, is discussing ways to make the Nordic region more dynamic by breaking down national barriers and help the region take full advantage of its economic and industrial strength. Partners include Wallenberg Investments AB, EQT AB, Nordea Bank Abp, Nasdaq Inc, SEB AB and the Novo Nordisk Foundation.
Capital markets are one of four key areas of focus, with members exploring how to harmonize the regulatory frameworks across Sweden, Denmark, Norway and Finland, the people said, asking not to be identified because the plans aren’t public.
One option under consideration is to go significantly further and consolidate the existing national exchanges into a single Nordic bourse in an effort to attract more capital, encourage more initial public offerings and strengthen the region’s position amid potential consolidation elsewhere in Europe, the people said.
The creation of a unified Scandinavian capital market could face significant hurdles, including securing the support of other market infrastructure providers not currently involved in the initiative.
While Nasdaq controls most of the region’s national bourses, other players such as Euroclear Holding NV provide much of the plumbing needed to settle trades and exchange securities for cash. Euronext NV also owns the Oslo stock exchange, so any arrangement would require cooperation from multiple parties.
Representatives for Nasdaq and Euronext didn’t respond to emailed requests for comment.
The alliance plans to present its vision at a summit in Gothenburg in November. The details are still being worked out, however, and the final proposal may change, the people said.
‘Nordic Compass’ Capital Markets Track is working to improve opportunities to raise capital to support competitiveness across all stages, from start-up, venture, growth and scale-up to IPOs, as well as the ecosystem for Nordic listings,’ said Christian Clausen, BlackRock Inc’s Nordic chairman and former CEO of Nordea, who chairs the track.
‘This includes analyses of a range of potential initiatives, including issues related to liquidity,’ he said, adding that ‘the work is still at an exploratory stage, and no agreement has yet been reached on specific initiatives or conclusions.’
The push comes as the Nordic countries struggle to harness capital into funding for fast-growing companies, prompting some of the region’s most promising businesses to seek financing or listings in the US instead or relocate elsewhere. Nordic pension investors and sovereign wealth funds manage almost $4 trillion and receive more than $175 billion in annual inflows, according to Nordic Compass, but despite this financial strength they struggle to create a capital market capable of funding companies as they scale.
Some Nordic companies that have opted to move to the US as they grow bigger include buy-now-pay-later giant Klarna Group Plc., music-streaming platform Spotify Technology SA and Oura Inc., the maker of health-tracking rings founded in Finland.
Rather than producing a set of recommendations on European competitiveness, Nordic Compass intends to focus on a limited number of initiatives that can be implemented and scaled relatively quickly.
‘The Nordics have the capital, the companies, and the innovation. The opportunity lies in connecting it more effectively together,’ Nordic Compass said in a post on LinkedIn. ‘Achieving this requires coordinated action.’