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(Excerpt)
Are the current battles in Europe of a business character or of a regulatory character? Summing up my own views on this, let me stress that I hope that we can make it into a business battle, as that is the way how our economies as well as our Exchanges could and should function. I am afraid that for a while to come we will first have to fight and win the regulatory battles in Europe before we have a level-playing field, on which all Exchanges and associated organisations can serve their clients and of course try to beat their competitors.
The European modernisation is delivering the goods: liquidity is generally at high levels compared to before 1990 even at current depressed markets, technology is if not fail- proof, at very high standards. Investors are protected by scrupulous application of time/price priority - which is not always the case in the US markets - and benefit from lower Exchange fees, which are small anyhow compared to those of intermediaries.
A crucial aspect is competition. Today, Europe's Exchanges compete each other as well as ECNs-ATSs and banking internalisation. Will we therefore see fewer Exchanges in a few years? I dare to argue yes but not as fast as you may believe. (…) Will we one day have one single European Exchange? I hope not as competition is needed to pursue innovation and continued investor protection.
Last but not least, quite on the contrary at this stage, I get to the Investment Services Directive, rightly called the constitution for the capital markets of Europe. The current ISD, which took only 7 years to establish, created a European passport for intermediaries, although in practice less successful than hoped for and implemented in some Member States in a rather hassled fashion.
Although a separate communication but not a proposal has been published by the Commission on clearing and settlement, the ISD probably will touch that subject as well. There again, we would argue that a level-playing field is important. One should shy away from too rigid and too detailed prescriptions at the EU level in order to avoid stultifying innovation and blocking competition.