The Swedish Equity Market, Assessment and Policy Recommendations 2026

1. Policy recommendations

Abstract

This chapter provides policy recommendations to further strengthen the Swedish equity markets, drawing both from in-depth interviews with market participants and the empirical analysis in chapter 2.

1.1. Introduction

In a context where the number of listed companies is decreasing in most advanced economies, the Swedish equity market has generated significant interest among both policymakers and market participants in recent years. As previous OECD work (2025[1]) has highlighted, the market is one of the most dynamic in Europe. It has the highest number of publicly listed companies in the EU in absolute terms and among the highest total market capitalisations, despite being the bloc’s ninth largest economy. The growth market segments in particular are very active. Investor returns over the last two decades have been some of the highest in the world. Retail engagement in domestic markets is extensive. The private equity markets are also far larger than economic weight alone would suggest. In addition, Sweden ranks highly in several indices measuring market and corporate sustainability as well as innovation (Block et al., 2024[2]; WIPO, 2023[3]; SolAbility, 2025[4]; Robeco, 2024[5]).

Notably, there does not appear to be any trade-offs between the growth of different types of funding in the Swedish market, which is sometimes proposed as an explanation for the broader advanced economy trend of a declining use of public equity markets, notably the growth of private equity. On the contrary, Swedish private equity funds raised nearly a tenth of all European private equity capital in the last decade, and Swedish companies are overrepresented as investment targets, having received 60% more private equity investment between 2014 and 2024 than the size of the economy would suggest. There is also a strong link between the private and public equity markets. Uniquely among peer countries, one of the most common ways for private equity firms to divest their holdings of Swedish companies in recent years has been to take them public (see sections 2.1.6 and 2.2). As shown in previous OECD work on the Swedish corporate bond market (2022[6]; 2024[7]), in parallel to the past two decades of public and private equity market growth, there has also been strong growth in the corporate bond market.

This dynamism is the result of long-term policy efforts to promote capital market development – supported and guided by a tradition of strong political focus on capital formation, business dynamics, shareholder rights and investor protection – involving several areas that go beyond capital market policy in a narrow sense. As such, as global markets and conditions change, domestic policy will need to respond to ensure the continued success of the Swedish market. This report formulates policy recommendations to that effect, drawing on extensive interviews with local market participants as well as the comprehensive empirical mapping undertaken in previous work and which has been further developed for this report (OECD, 2025[1]). In addition to specific policy recommendations, it seeks to underline areas that have been particularly important to Swedish market development and that are therefore critical to safeguard. These may also be of relevance to broader European initiatives such as the EU’s Savings and Investments Union agenda. The recommendations are summarised below.

Table 1.1. Summary of policy recommendations

Policy area	Recommendation
MTF-listed companies	Extend the regulated market obligation to disclose major changes in shareholdings to also cover transactions in companies with shares listed on an MTF.
	Extend the current takeover sanction regime to include breaches of the MTF Takeover Rules in addition to those on the regulated market.
	Consider the establishment of a council or working group with the specific purpose of representing the perspective of MTF-listed companies in discussions with other market stakeholders.
Takeovers	Undertake a review of the legal process following a squeeze-out, with the aim of reducing the time required for the procedure following a takeover bid.
	Any considerations with respect to the threshold for mandatory bids should be based on an analysis of the effectiveness of the current threshold and the costs and benefits of potential changes.
Foreign direct investment	Without prejudice to the legitimate screening of foreign investments for national security interests, undertake a review of the FDI Screening Act with a view to reducing its negative effects on the equity market and reducing costs for both public authorities and companies.
Directed share issues	Review and revise the law implementing a supermajority requirement for directed share issues to board members, executives and employees to bring it in line with the threshold for other directed share issues.
Dialogue with the FSA	Examine whether a revision of the FSA’s mandate with respect to the balance between supervision and guidance is merited to address concerns raised by market participants regarding the need for further guidance.
Fund market concentration	Monitor concentration levels in the investment fund market and seek to identify policy levers to promote competition and diversity.
Areas to safeguard and monitor
Policy area	Recommendation
Empowering shareholder engagement	Recognise the importance of the tradition of active ownership engagement by Swedish investors and monitor the effects of the increasing prevalence of passive investment in this respect.
Investor protection	Safeguard the benefits stemming from the well-established system of investor protection in Sweden and ensure potential changes to the legal and regulatory framework are made in close consultation with market stakeholders.
Regulatory design	Maintain the current framework of self-regulation/delegated regulation and carefully evaluate the costs of potential changes to the system.
Investor heterogeneity	Monitor structural changes to the investor base that might reduce the benefits from heterogeneity, such as excessive market concentration, and include investor heterogeneity as a metric when evaluating policy options.

1.2. Policy recommendations

1.2.1. The MTF segment

The multilateral trading facility (MTF), or growth market, segment has been an important driver of broader Swedish equity market development. The Swedish MTF market is the largest in the EU, both in terms of the number of listed companies and total market capitalisation, with 551 companies listed across three different MTFs at the end of 2025 – 61% of the total number of domestically listed companies. That is 1.6 times more than the EU’s second largest MTF market by number of listed companies (Poland, which had 353 listed companies at the end of 2025, representing 48% of domestically listed firms). In France – the third largest market by number of listed companies and second by market capitalisation – 345 companies were listed at the end of 2025, accounting for 54% of domestic listings. During the past decade, approximately four out of every five new listings in Sweden have been on an MTF. Importantly, these listings often serve as a stepping stone to the regulated markets. Since 2013, an average of 45% of new listings on Swedish regulated markets annually have been companies that were already listed on a local growth market (see Figure 2.13).

There are, however, certain aspects of Swedish policy with respect to MTFs that could usefully be addressed, especially considering the success of the existing Swedish approach of limited regulatory differentiation between MTFs and regulated markets (see section 1.3.2).

Disclosure of acquisition or disposal of major shareholdings

One way in which Swedish regulation differentiates between MTFs and regulated markets relates to the requirement to disclose acquisitions or disposals of major shareholdings. In accordance with the EU Transparency Directive, the Swedish Act on Trading in Financial Instruments (1991[8]) mandates that any shareholder passing key ownership thresholds (5%, 10%, 15%, 20%, 25%, 30%, 50%, 66,66% and 90%) in a company with shares listed on a regulated market must disclose it publicly (so-called “flagging”). This obligation does not, however, apply to transactions in shares of companies listed on MTFs.

The original Swedish rules regarding disclosure of changes in shareholdings, established in 1983, were applicable to all market segments and became limited to regulated markets only with implementation of the EU Transparency Directive in 2004. At that point in time, the number of companies listed on MTFs was very small. Since then, however, as mentioned above and further detailed in section 2.1.6, they have grown to become a very substantial part of the domestic market. With this development in mind, it is recommended to extend the obligation to disclose major changes in shareholdings to also cover transactions in companies with shares listed on an MTF. A corresponding extension of the rules was made in Finland in 2024.

Sanctions and takeover rules

The Swedish takeover regulation consists partially of statutory law and partially of self-regulation. Certain fundamental rules (primarily related to the implementation of the EU Takeover Directive) are provided in the Swedish Takeover Act (2006[9]), while most detailed rules are found in the takeover rules issued by the Swedish Stock Market Regulation Committee and adopted by the stock exchanges. The takeover rules become legally binding for an offeror through a section in the Swedish Takeover Act which stipulates that a public takeover bid for shares listed on a regulated market may only be made by an offeror who has made an undertaking to the stock exchange operating the regulated market on which the company's shares are traded. The offeror undertakes to comply with the rules laid down by the stock exchange for such offers, and to submit to the sanctions that the stock exchange may decide upon in the event of a breach of these rules. This undertaking means ensuring compliance with the takeover rules laid down by the exchange, and submitting to the sanctions that the stock exchange may decide upon in the event of a breach thereof. Because the legislative basis for the Swedish takeover rules is the EU Takeover Directive, this does not apply to bids for shares in a company listed on an MTF.

The EU Takeover Directive dates from 2004, at which point the Swedish MTF market was significantly smaller, with very limited takeover activity. Similarly to the dynamics discussed above regarding disclosure of changes in shareholdings, the limitation of the Takeover Act and its sanctions to regulated markets simply reflected the underlying scope of the implemented EU directive, and for twenty years there were no breaches of the Takeover Rules for MTFs despite the lack of binding sanctions. As the MTF segment has grown, however, the number of takeover bids has increased substantially. Between 2020 and 2025, MTF companies were the targets of approximately 70% of all takeover bids in Sweden. In 2025, for the first time since the inception of the Swedish takeover regulation, there were also two cases of offerors not complying with the MTF Takeover Rules, creating uncertainty in the market. Given these developments, and the growing prominence of the Swedish MTF markets since the implementation of the Takeover Act in 2006, it is recommended to extend the sanction regime to include breaches of the MTF Takeover Rules.

Fostering dialogue between MTF issuers and other market stakeholders

Several market participants consulted by the OECD have highlighted the culture of and infrastructure for continuous high-level dialogue between key stakeholders from different parts of the Swedish market as fundamental to its success. Co-operation and dialogue between for example the Swedish Association for Institutional Investors (Institutionella Ägares Förening) and major domestic investment companies on the investor side, and the Confederation of Swedish Enterprise on the corporate side, allow for sharing of perspectives and the identification of measures that can help improve market functioning. However, while this infrastructure is well-established for large companies listed on regulated markets – both through individual company engagement and the Confederation of Swedish Enterprise – there is no organisation similarly representing firms listed on MTFs. This reflects both the relatively recent development of the MTF segment and the lack of resources to engage in policy debate in a structured manner among smaller companies. There are examples in other jurisdictions of bodies designed for such purposes, such as the Quoted Companies Alliance in the United Kingdom. The lack of such a body risks MTF companies’ perspectives not being reflected in policy debates. It is therefore recommended to consider the establishment of a council or working group with the specific purpose of representing the perspective of companies listed on an MTF.

1.2.2. Takeovers

The Swedish takeover market is active, with an average of 26 bids per year from 2020-2025. That is similar to the activity in much larger countries like Germany, and significantly higher than peer countries like Denmark, Finland and the Netherlands.1 One driver of this level of activity is a well-functioning regulatory framework supported by the Swedish Securities Council (Aktiemarknadsnämnden) to which the Swedish Financial Supervisory Authority (Finansinspektionen, FSA) has delegated the right to issue rulings on public takeover bids. This is reflected in the fact that there were no court cases related to takeover bids in Sweden between 2010 and 2025, as well as the comparatively low costs and short timeframe for carrying out a takeover bid. Estimations by five of Sweden’s largest legal advisors solicited for this report suggest an average cost of around USD 2-3 million and a timeframe of approximately 10 weeks (non-competing cash offer without legal complications such as competition law reviews).2 Even so, stakeholder consultations have helped identify certain areas that merit policy consideration.

Squeeze-outs

Following a takeover bid where the offeror has reached a holding of over 90% of the shares in the target company, a squeeze-out procedure is implemented in accordance with the Swedish Companies Act (2005[10]). Since the procedure is tried by an arbitration tribunal, public data concerning such procedures are not readily available. However, an analysis of a sample of 34 arbitration awards announced between 2020 and 2025 done for this report suggests the average total time for a redemption procedure is 15 months (with advance access, i.e. technical transfer, of the shares taking on average around 4 months). While the length of the procedures varies significantly from case to case, internationally active market participants have noted the procedure is generally lengthy, which can significantly delay restructurings through a takeover process. An overview of the squeeze-out regime should therefore be undertaken, with the aim of reducing the time required for the procedure following a takeover bid.

Mandatory bids

Implemented on the basis of the EU Takeover Directive, the current Swedish mandatory bid rule has been in effect since 2006 and stipulates that an owner that reaches 30% or more of the votes in a company listed on a regulated market has to make a public offer for the remaining shares. During consultations with the OECD, some respondents have suggested a review of the threshold for a mandatory bid, while others have expressed satisfaction with the current threshold. Any further considerations with respect to an appropriate threshold for a mandatory bid should be based on additional analysis of the effectiveness of the current system and the costs and benefits associated with potential changes thereto.

1.2.3. Foreign direct investment screening

Recent years have seen a global trend towards the introduction or reform of foreign investment related policy with a view to safeguarding security interests (OECD, 2025[11]). Sweden is no exception to this trend. The Swedish Foreign Direct Investment (FDI) Screening Act (2023[12]) was introduced in December 2023. The scope of reporting mandates by the legislation was intentionally set wide to capture all potential sensitive transactions and therefore includes all types of investors, including domestic ones, and a wide range of sectors. This scope is notably wider than those applicable in comparable jurisdictions. In 2024, the first full year in which the rules were in force, there were 1 261 applications under the FDI Screening Act. That is similar to the total number of applications across Belgium, Finland, France, Germany, the Netherlands and Spain during the same period and nearly six times the average in these countries (Implementeringsrådet, 2026[13]). Between December 2023 and the end of 2025 there were 3 362 applications in Sweden. Of the 3 067 applications for which a decision is available, 97% were unconditionally granted and 0.1% resulted in prohibition of the investment (Inspectorate of Strategic Products, 2026[14]).

Several stakeholders consulted by the OECD have suggested that the regulation does not sufficiently account for the implications on business and equity market functioning. The Swedish government’s Implementation Council (2026[13]) has also recommended amendments to the rules, notably with respect to predictability and compliance costs, making reference to the structure of the equity market. The current legislation introduces long delays to what were previously standard transactions, such as intra-group transactions in fully domestic company groups, investments by Swedish investment funds in Swedish companies, and secondary public offerings (SPOs). Given that equity market transactions are often time sensitive, this can create substantial frictions in the market. Without prejudice to the legitimate screening of foreign investments for national security interests, a review of the FDI Screening Act is recommended, with a view to improving efficiency and reducing cost for both public authorities and companies. One possible solution to the issues faced by investors and businesses that would not prejudice national security interests may be to introduce the possibility of investors getting an ex ante screening, granting them a general dispensation to carry out investments without further screenings conditional on there being no changes in ownership or control in the applicant.

1.2.4. Directed share issues to board members, executives and employees

The Swedish regulatory model includes strong statutory pre-emption rights for existing shareholders. When shares are privately placed without adhering to these pre-emptive rights, these must be approved by the general meeting of shareholders by a two-thirds majority of votes cast and shares represented. For directed issues of shares or warrants to board members, the CEO and other employees of the company, the approval threshold increases to nine-tenths of the general meeting (The Swedish Companies Act, 2005[10]). This supermajority requirement was implemented in the wake of a corporate scandal in the 1980s in which corporate executives received disproportionate allocations in a rights issue on very favourable conditions.

Several stakeholders have noted that the supermajority requirement can create frictions since directed share issues of this character are an important tool in incentive and remuneration programmes, helping attract managerial, board and employee talent, as well as to ensure alignment between managerial and shareholder interests. These frictions have increased in parallel with the growing prevalence of foreign investors in the Swedish market, which represented over a third of identified owners at the end of 2025 (see Figure 2.27), and in particular in a context of increasing passive investment. This is because many passive investors take a standardised approach to voting or abstain from voting altogether on non-standard issues. Since the supermajority requirement is unique to Sweden, increased levels of foreign and passive ownership have complicated the implementation of share-based incentive programmes. In addition, stakeholders have noted the proliferation of market practices where such programmes are designed to avoid requiring a supermajority vote, which both decreases the actual shareholder influence in these matters and makes the programmes unnecessarily costly for companies and shareholders. The supermajority requirement’s effect on minority shareholder protection is taken to be small. With these issues in mind, it is recommended to review and revise the law implementing a supermajority requirement for directed share issues to board members, executives and employees to bring it in line with the threshold for other directed share issues.

1.2.5. Dialogue with the Financial Services Authority

Stakeholders consider the dialogue with the Swedish FSA (Finansinspektionen) to be functioning well in many areas. Issuers and advisors have, however, noted that the nature of the dialogue has changed during the last decade, particularly in areas characterised by complex and principles-based regulation such as the Market Abuse Regulation, reducing legal certainty. Given the inherent interpretative challenges associated with such regulations, market participants have expressed a need for further guidance on the practical application of certain rules. This discussion is ongoing, and the Swedish FSA has indicated an openness to continued engagement with market participants within the framework of its supervisory mandate. Since autumn 2025, the authority has also started taking measures to further strengthen dialogue, including increasing the number of roundtable discussions with stakeholders and issuing additional public guidance. To address the concerns raised by market participants, the government is recommended to consult with stakeholders, undertake further analysis and, subject to the findings as well as future developments, consider a revision of the supervisory mandate concerning the authorised balance between supervision and guidance.

1.2.6. Fund market concentration

The Swedish investment fund market has seen an increase in concentration in recent years. This is partly a positive development – given the significant economies of scale inherent in this market segment, consolidation can have benefits in the form of lower management fees for investors. However, it is important to ensure that this does not come at the expense of investor diversity more broadly. Some market participants have raised concerns in this regard. At the end of 2025, the ten largest domestic investment funds held 3.7% of total domestic equity market capitalisation and 31% of total domestic equity assets held by funds (up from 3.3% and 29% in 2019).3 This coincides with a period of mergers in the market, both in the public pension system through the restructuring of the buffer funds (see Box 2.5) and in the private fund market, in addition to the reform of the Swedish Fund Selection Agency’s (Fondtorgsnämnden) procurement process. Several stakeholders raised this as a possible concern given the role investment funds play as anchor investors in small and mid-cap companies, since larger fund sizes would bring about corresponding increases in the minimum ticket size, making such investments less viable. Given the role of smaller companies in the success of the Swedish market, this development merits monitoring and calls for further investigation, including identification of possible policy levers to promote competition and diversity in the fund market.

1.3. Areas to safeguard and monitor

As noted in previous OECD work (2025[1]), there are many areas of the Swedish equity market that function well and that have contributed to domestic market success, notably a widespread equity culture, a substantial domestic institutional investor base, significant household engagement in local markets, the fluidity of movement between private, growth and regulated public markets, the regulatory design and corporate governance framework. These are all results of focused, long-term policy efforts. In a context of a changing economic, financial and political climate globally, it is worth emphasising certain policy areas that have been particularly important to the Swedish equity market success, with a view to ensuring the continuation of these policies.

1.3.1. Empowering shareholder engagement

The OECD (2025[1]) assessment report of the Swedish equity market noted the domestic corporate governance model as an important driver of the market’s development. A distinguishing feature is the clear focus on shareholder control. Swedish company law places control firmly with the shareholders and there are virtually no matters on which the general meeting cannot make binding resolutions or give the board and management directions with respect to, including immediate dismissal. This leaves very limited room for managerial entrenchment. A notable mechanism is the nomination and appointment process for the board of directors. The Swedish Corporate Governance Code stipulates that board member nominees be proposed by a nomination committee, comprising major shareholders or their representatives, that is appointed by the shareholders at the general meeting. This contrasts with practices in many other countries, where nomination committees are usually formed as subcommittees of the board. This shareholder-centric framework is accompanied by an extensive set of rules concerning equal treatment of shareholders, individual shareholder rights and specific minority shareholder rights (Lekvall, 2014[15]; Gilson, 2014[16]; Nenova, 2003[17]).

The model presupposes and encourages active engagement from company shareholders, the culture of which is widespread in Sweden, with controlling as well as minority shareholders often playing an important role. Controlling shareholder engagement is facilitated by the availability and widespread use of dual class share structures, which allows both entrepreneurs and external shareholders with the capacity for engagement to hold a significant proportion of the votes in a company at a lower cost than what otherwise would be possible, and limiting negative free float effects. The Swedish market also features a number of significant family-controlled investment firms and foundations that have large and sometimes controlling stakes in a diverse range of major companies across different sectors of the economy (see Table 2.2).

Other institutional investors, too, are often highly engaged. Pension fund representatives, for example, have noted that their participation in nomination committees and the possibility of actively influencing the general governance of their portfolio companies shape their assessment of investment risk, enabling higher allocations to domestic equities. Notably, Swedish institutional investors have formed an association (Institutionella Ägares Förening) with the explicit purpose of facilitating engagement in regulatory matters and system development.

The importance of active ownership engagement in corporate governance issues by Swedish investors should be recognised, and the effects of the increasing prevalence of passive investment in this respect should be monitored.

1.3.2. Investor protection and minority shareholder rights

One of the prevailing narratives seeking to explain the lack of new equity market listings in many jurisdictions relates to excessive regulatory burdens placed on listed companies (see for instance Pagano, Panetta and Zingales (1998[18]); Gao, Ritter and Zhu (2013[19]); Djankov et al (2002[20])). Consequently, deregulatory agendas have gained ground, notably in Europe. While the identification of excessively onerous and possibly duplicative regulation is a legitimate exercise and, if done right, serves to reduce deadweight cost and increase market efficiency, it is imperative to distinguish the regulations that are overly stringent to the detriment of the market from those that are stringent to the ultimate benefit of the market.

One critical area in this regard is investor protection, where Sweden serves as a useful example. A distinct feature of the Swedish regulatory framework is a rigorous regime of shareholder rights and investor protection, with far-reaching regulation concerning equal treatment of shareholders, transparency, strict majority voting requirements and pre-emptive rights, strict rules for related party transactions and specific minority powers including for example the right to demand a second “minority” auditor at the expense of the company, the right to demand extraordinary general meetings to be held and the right to demand minimum dividends to be paid out (Lidman and Skog, 2021[21]).

Several stakeholders, both investors and issuers, have raised the strong investor protection regime in Sweden as a fundamental condition for the market’s growth and dynamism, underpinning market trust and attracting investors with different risk profiles. This contributes to lowering the cost of equity capital, enhancing the appeal of listing and allows not just large but also small and early-stage firms to turn to the equity market for financing.

This is also visible in the Swedish approach to regulation on MTF markets. In many jurisdictions, the requirements on companies listed on an MTF are significantly less stringent than those applicable on regulated markets. This is reflected in EU law, where many directives, regulations and specific rules apply to companies listed on regulated markets but not on MTFs. Swedish regulation, however, in many areas does not significantly distinguish between companies listed on different venues, generally extending the scope of EU law applicable to companies listed on regulated markets to MTF listings as well (notable exceptions are those discussed in section 1.2.1). This includes, for example, core material regulation on takeovers, related party transactions, share issuance and say on pay. While imposing greater compliance requirements on smaller companies, this may also give investors greater familiarity and certainty with respect to their legal protection on different markets, possibly increasing interest in MTF investments and at the same time make the move from an MTF to a regulated market less imposing from a company perspective. This focus on investor protection has been cited by stakeholders as an important aspect of Swedish MTF market success.

Given the widespread recognition among market participants of the importance of rigorous investor protection in Sweden, potential changes to the legal and regulatory framework should be made in close consultation with market stakeholders and seek to safeguard the benefits stemming from the well-established system of investor protection.

1.3.3. Regulatory design and delegated regulation

One of the core functions of capital market regulation is to provide legal clarity and predictability to shareholders and companies, reducing the cost of investing and the cost of capital. A prerequisite for this is not only clear regulation, but also continuous dialogue with supervisory authorities concerning appropriate courses of action and the possibility of binding advance rulings. The latter is a distinguishing feature of the Swedish equity market, most notably through consultations and rulings of the Swedish Securities Council (Aktiemarknadsnämnden). As noted in previous OECD (2025[1]) work, Swedish capital market law has a unique structure that puts it somewhere in between a common and civil law system. While the Companies Act provides a general framework and set of rules, the detailed rules governing Swedish equity markets are not laid out in legislation but are instead delegated to a number of bodies such as the Swedish Securities Council, the Stock Market Regulation Committee (Aktiemarknadens självregleringskommitté) and the Corporate Governance Board (Kollegiet för svensk bolagsstyrning). These bodies are funded by key market actors and have been established in co-operation with the legislator, meaning they have statutory mandates that can make their rulings legally binding.

The Securities Council can issue statements on almost all actions by a listed company or a shareholder in such a company, including matters concerning interpretation of and dispensation from the takeover regulation, the rules concerning directed share issues, the Swedish corporate governance code, incentive programmes and de-listings (though notably not issues concerning prospectuses and the market abuse regulation, which fall under the responsibility of the FSA). Market participants have continuous access to consultations with the Securities Council secretariat, and a formal, binding ruling of the Council can be obtained within two weeks. The Securities Council issues around 60 rulings per year, most of which are made public, contributing to predictability.

Market participants note that this structure provides Swedish equity market regulation with flexibility and rapidity, allowing it to move in step with market developments, as well as giving the market access to cost efficient and rapid dispute resolution. This is part of the reason Sweden has been able to combine a strict investor protection regime with significant market dynamism. As with investor protection, Swedish policymakers should recognise and safeguard the merits of the current regulatory framework. The costs of any potential changes to the system should be carefully evaluated.

1.3.4. Investor heterogeneity

The Swedish market is characterised by a broad investor base of heterogenous actors with respect to risk profiles, investment horizons and engagement strategies, spanning millions of retail investors, a diverse group of domestic institutional investors and professional controlling shareholders. This is, to an extent, the effect of conscious policy decisions. The level of retail investment, for example – with more than one in every three Swedes having a dedicated investment savings account (ISK) – is the result of continuous policy efforts since at least the 1970s. These have included fiscal incentives, but some of the most effective policies, such as the 2012 ISK account, owe their success as much to simplification and lowering access barriers as they do to tax incentives. This is an important policy lesson, highlighting the possibility of stimulating household engagement even without direct fiscal benefits. Policies more indirectly related to capital markets, notably digitalisation of government services and extensive social security coverage, have likely also helped stimulate retail investment activity.

The significance of the institutional investor base, notably pension funds, is also a direct effect of dedicated government policy. Swedish pension fund assets represent more than a fifth of the EU’s total, with substantial allocations to domestic equities. This follows from the design of the Swedish pension system, which has had an asset-backed component (through the public buffer funds) since the 1960s, and exposure to equity markets for more than fifty years. Reforms in the 1990s that moved towards a defined contribution system substantially accelerated the importance of the system to domestic capital markets. The public pension system was designed with investor heterogeneity in mind, with management split into several independent funds. Extensive occupational pension fund coverage – 90% of Swedish employees are automatically covered – has also been a major contributing factor to the close connection between pension funds and capital market development. Chapter 2 and OECD (2025[1]) provide further detail on the Swedish investor base and the policies that have helped foster investor heterogeneity.

This diverse investor structure helps promote efficient price discovery, liquidity, and counter-cyclicality, making it a key aspect of the market. It is therefore important to monitor structural changes to the investor base that might reduce the benefits from heterogeneity, such as excessive market concentration, and to include investor heterogeneity as a metric when evaluating policy options.

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[8] The Swedish Act on Trading in Financial Instruments (1991), Lag (1991:980) om handel med finansiella instrument, https://www.riksdagen.se/sv/dokument-och-lagar/dokument/svensk-forfattningssamling/lag-1991980-om-handel-med-finansiella_sfs-1991-980/.

[10] The Swedish Companies Act (2005), Aktiebolagslagen (2005:551), https://www.riksdagen.se/sv/dokument-och-lagar/dokument/svensk-forfattningssamling/aktiebolagslag-2005551_sfs-2005-551/.

[12] The Swedish Foreign Direct Investment Act (2023), Lag (2023:560) om granskning av utländska direktinvesteringar, https://www.riksdagen.se/sv/dokument-och-lagar/dokument/svensk-forfattningssamling/lag-2023560-om-granskning-av-utlandska_sfs-2023-560/.

[9] The Swedish Takeover Act (2006), Lag (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden, https://www.riksdagen.se/sv/dokument-och-lagar/dokument/svensk-forfattningssamling/lag-2006451-om-offentliga-uppkopserbjudanden-pa_sfs-2006-451/.

Notes

← 1.  Based on M&A data provided by LSEG. Country classification according to the nation of the target company’s primary stock exchange listing. Refers to completed or withdrawn offers. Excludes stake purchases, repurchases and self-tender or recapitalisation deals.

← 2.  Estimates obtained through soliciting partners in the public M&A practice of the following firms: Cederquist, Gernandt & Danielsson, Mannheimer Swartling, Roschier, and Vinge.

← 3.  Based on analysis of security-level holding data of investment funds reporting to the Financial Services Authority, available here: https://www.fi.se/sv/vara-register/fondinnehav-per-kvartal/.