CoL: New Report on the Future of Clearing and Settlement in Europe

07 December 2005

The Corporation of London launched a new report into the Future of Clearing and Settlement in Europe written by, Bourse Consult. The report states that progress is being made towards reducing the cost and complexity of European clearing and settlement but it is slower than many would hope for. A reform of this magnitude is bound to take time. The slow pace may be frustrating, but heavy handed legislative action is likely to slow things down. Nevertheless, there are factors present that are unnecessarily inhibiting this process.

The authors conclude among others that the existence of vertically-integrated structures is an obstacle to rationalising the European post-trade infrastructure. Existing powers under competition law should be used to ensure that there is open and easy access to all parts of the trading, clearing and settlement chain.

Also, a new European directive should only be considered as a facilitating mechanism in the last resort. The regulation of clearing and settlement organisations operating on a pan-European basis needs to be considerably simplified so that it supports the development of providers offering services across several countries. Wherever possible, this should be achieved by regulators using their existing powers, rather than waiting for new legislation.

Report

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