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Report calls for removal of EU clearing barriers

BELGIUM – A European Commission-backed report has called for the “concerted removal” of barriers to clearing and settlement in the European Union.

The so-called second Giovannini Report today said the barriers would be replaced by a “set of technical standards, market conventions, regulations and laws that are consistent with a barrier free environment for the provision of post-trading services”.

The 62-page report from a group headed by Italian asset management executive Alberto Giovannini set “aggressive but realistic deadlines” for the removal of the barriers it identified in its first report in 2001.

“We believe that the economic and social benefits of the reform far outweigh the inevitable costs that he industry will have to incur to adapt to the new regime,” Giovannini said.

“Building integrated and efficient clearing and settlement arrangements is urgent and functional to other initiatives to strengthen the EU financial system,” he added.

The 2001 report had identified 15 barriers – based in market
practice/regulatory requirements, tax procedures and issues of legal certainty.

Euroclear spokesman Conor Leeson said: “We warmly welcome today's report which, if acted upon, should make a major contribution to delivering the long-cherished goal of a single capital market for Europe.”

He added the report places the onus on EU member states to pro-actively remove the regulatory, fiscal and legal barriers that are obstructing further integration.

Germany’s Deutsche Boerse, which controls the Clearstream securities services company, said it supports the call for settlement systems to be opened up.

“Clearstream will continue to be the preferred settlement location for German securities due to its superior offerings,” it said.

“Deutsche Boerse regards opening up the settlement systems Europe-wide to allow mutual access as additional business potential in clearing and settlement and is committed to work with other infrastructure providers to further increase the efficiency of cross border settlement.”

Both Deutsche Boerse and Euroclear were members of the Giovannini group.

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