In Europe, the proportion of small and medium-sized companies which are rated is comparatively low, and the rating industry itself is not yet as developed as it is in the United States. Nonetheless, some progress is already evident. For bond issuers, the euro market has opened up a much wider circle of investors than the small national markets could offer. There is broad agreement on the view that the recent intense merger and acquisition activity, as well as the heavy investment in the telecommunications industry, would have been much more difficult to finance without the broader euro area market. However, the changes are not only volume-related.
Qualitative developments are also important for improving market liquidity.
The improved liquidity achieved through qualitative improvements relates to a number of private issues too, most notably the Jumbo Pfandbriefe. Qualitative improvement is particularly evident in the field of derivatives, where some euro-denominated products have, in fact, taken the lead globally. The Bund contract is now the most active and liquid futures contract in the world. Of course there are some market segments where progress has been less impressive, notably due to differences in national legislation. This is the case, for example, in the repo market, as the legal status and the definition of repos differ across the euro area.