Brussels, 24/05/2006 (Agence Europe) - The European Commission's Internal Market Directorate General published a technical document on clearing and settlement on its website on 23 May. The document explains that cutting backroom costs (clearing and settlement) would have a considerable impact on liquidity and therefore on gross domestic product (GDP). The document adds that the more competitive the market, the greater the impact cutting costs will have on cash flow and GDP. Given the advantages of size that would emerge from greater industry consolidation, measures should be launched to remove obstacles to integration of clearing and settlement.
The document does not indicate appropriate measures to be taken but the European Commission will be publishing an impact study in the next few months, considering the feasibility of EU legislation on clearing and settlement. In March this year, it sent industry a final warning to come up with concrete solutions to cut the costs of cross-border money payments and encourage EU integration (see EUROPE 9146).
Mergers of stock markets are a topical issue, with competing bids by Deutsche Börse and New York Stock Exchange (NYSE) to merge with the pan-EU giant Euronext which controls the stock markets of Amsterdam, Brussels, Lisbon and Paris. The NASDAQ in the US recently increased its stake in the London Stock Exchange by 25%. Germany is strongly opposed to the idea of EU legislation to boost competition in clearing and settlement. Deutsche Börse in Germany controls both the electronic share dealing platform and post-market services.