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Many respondents criticized the differences in regulatory arrangements across European jurisdictions and the lack of a harmonised regulatory and supervisory framework. The progress of many link requests initiated under the Access and Interoperability Guideline of the Code is partly limited by these differences, FESE states.
Suggestions to overcome these differences reach from “a mandatory piece of European legislation, possibly a directive” as demanded by Intesa Sanpaolo, to regulatory arrangements with are principle-based, proportionate and targeted as LIBA states.
Some responses also focused on the practical problems when it comes to establishing links. Euroclear, for example, complains about the requirements imposed by the Frankfurter Wertpapier Börse (FWB) in particular that settlement should take place in central bank money. Euroclear calls CESR to set and use common standards for the efficient and sound operation of post-trade infrastructures across the EU, applicable to both domestic and cross-border activity to remove the regulatory barriers.
However, FWB argues that due to lacking a harmonized European regulation for clearing and settlement the FWB established a draft catalogue of minimum requirements and underlines that it will review these once the ESCB-CESR recommendations have been finalized. FWB itself calls for reciprocity regarding the access to trade flows which will be a crucial pre-requisite for the implementation of any link, it states.
The LSE, however, draws on the experience over the last 12 months criticizing that the implementation of the inter-operability aspects of the Code have been far from straightforward. Reminding on the default of Lehman Brothers, the LSE reminds that there may be new risks inherent in trading across multiple venues with multiple but as yet unlinked clearing houses. LSE, therefore, calls CESR to consider the extent to which a wide network of linkages may affect systemic risks.