Brussels, 28/04/2004 (Agence Europe) - On Wednesday, the European Commission launched a consultation into securities clearing and settlement, "back office" operations which allow the transfer of payment and ownership of securities after an agreement has been concluded between buyer and seller. In a press release, it presents a draft framework directive and proposes to set up an expert group. Interested parties have until 30 July to make their positions known. The draft framework directive guarantees non-discriminatory market access, on the basis of the principle of mutual recognition. It will impose total freedom of choice and access to back-office services in all the Member States. This freedom of access will allow operators to "choose to have their transactions regulated, and where to keep their securities, depending on their commercial needs. They can thus decide to entrust all their assets to a single system, or a combination of systems", comments the Commission.
Proceeding cautiously, the Commission has not directly attacked the monopolies which currently dominate the market, or national laws which sometimes require the involvement of a public operator. "Voluntary action on the part of legislators and national regulators seems much less safe and could block pan-European liberalisation before long", says the Commission. In particular, it proposes a separation of back-office operations and other activities managed by public bodies. At a later date, it could present a proposal enforcing an separation of operations for accounting purposes, in default of legal separation. The European Parliament and the private sector both support this kind of separation, in order to avoid cross-subsidy and competition distortions between private and public operators. "We do not feel that this is necessary, but the dialogue continues", said a Commission source.
The Commission does not intend to touch the structure of the market, but it is counting firstly on transparency rules, to avoid anticipated abuses by monopolies of their dominant positions to harm their competitors, and secondly a careful monitoring of the situation by the competition services.
The Commission is currently conducting an inquiry into the case of Clearstream. This company, which is owned by the Deutsche Börse, is accused of abusing its public monopoly on clearing to stop potential rivals from entering the German securities settlement-delivery market. The consultative committee of the Member States is being consulted this week on the case, which is unlikely to be settled for several months, according to a Commission source.
The Commission is also proposing to set up a consultative group, made up of high representatives of public or private bodies involved, such as the European System of Central Banks (ESCB) and the Committee of European Securities Regulators (CESR). This group would have an advisory role in removing barriers identified by the reports of the Giovannini group. At the same time, the Commission suggests setting up separate expert groups, to look at the legal and tax barriers.