Brussels, 26/11/2001 (Agence Europe) - The group of financial experts chaired by Alberto Giovannini presented a report on Friday into the clearing and settlement of cross-border securities transactions in the European Union that identifies 15 barriers to the creation of a genuine financial single market. Alberto Giovannini explained to journalists that the Group's had been given an essentially practical mandate and had tried to identified concrete barriers to securities transactions. He noted that the EU infrastructure for clearing and settling cross-border transactions remains highly fragmented with complications arising because of the need to access many national systems, adding that the structure had not changed despite the liberalisation of capital and the introduction of the euro. There can be up to five intermediaries for a national transaction and eleven for cross-border transactions.
The barriers can be divided into three categories: 1) technical requirements - like IT platforms, national differences in rules governing corporate actions, differences in the timing of intra-day settlement finality, etc; 2) taxation - withholding tax procedures disadvantaging foreign intermediaries, etc; and 3) legal certainty - national differences in the legal treatment of securities and bilateral netting and uneven application of conflict of law rules.
In a press release, the Commission notes that these barriers can be got round through the market or through political initiatives. The Single Market Commissioner, Frits Bolkestein, stated that, "the Commission will present next year a Communication on EU clearing and settlement systems to tackle some of these barriers. At the same time, financial market participants should work towards finding market-based solution within the framework of the EU competition law".