Political significance. There is a great deal of talk at the political level these days about European financial regulations and regulations for the stock exchanges. My lack of knowledge on the subject prevents me from saying anything about the technical and banking aspects of these issues. But the political significance of the discussions is becoming ever more clear. The point is how far the private players (stock exchanges and banks), the autonomy of which is acknowledged, can act as they please, and if, on certain issues, the public authorities have their say. I recently devoted a general commentary to this problem, on the creation of a coherent and structured European whole (see this column in bulletin 9219), and the matter of stock exchanges was amply covered. Political heavyweights have spoken too: Angela Merkel, Jacques Chirac and Jean-Claude Trichet have indicated their preference for a grouping of eurozone stock exchanges, rather than having one or more merge with an American stock exchange. Italian finance minister Tommaso Padoa-Schioppa gave greater detail, speaking about a network linking Euronext (which brings together the Paris, Amsterdam, Brussels and Lisbon stock exchanges) and the Deutsche Börse in Frankfurt and the Borsa Italiana di Milano. This would create a single securities markets structure in the euro zone (London, already linked to the Americans, would stay out). Each market would remain independent, but it would be a huge step towards a European financial market.
Things have moved on. Borsa Italiana has drawn up a detailed plan, making provision for the creation of a holding company (with the status of a European Statute Company) which would have direct control over the shares and derivatives markets, and over the information technologies of the united exchanges (Frankfurt, Paris, Milan, Amsterdam, Brussels, Lisbon, and, possibly, Madrid). Separate holding companies would take care of clearing and settlement, involving Eurex Clearing and Clearstream.
The politically important point is that the Eurogroup discussed this matter at its ministerial meeting this week. Its President Jean-Claude Juncker did not mention it in his press conference, but other ministers who took part did not show the same reticence. The outcome is that a) several ministers have confirmed that “public authorities cannot remain indifferent” to the way in which the organisation of eurozone stock exchanges develops; b) those wishing a “pan-European solution” won the day. Tommaso Padoa-Schioppa was the most talkative after the meeting: “there is strong public interest in the way in which the markets are organised. In the EU, public authorities form a constellation of national authorities which are in part, it is true, in competition, because the exchanges are in competition, and, in part, work together for the common interest, that of the eurozone”.
Post-trading activities. At the same time, the European internal market Charlie McCreevy announced that he would not propose a Community directive on post-trading activities, that is clearing and settlement. He feels it would be preferable for the professionals to devise their own ambitious and realistic code of conduct, and undertake to abide by it. In his opinion, a legislative process would block the restructuring process which is in train. He nonetheless defined the objectives to be reached and set a timetable (by the end of the year, for the transparency aspect) and the Commission would intervene if the outcome was not satisfactory (see bulletin 9230). Member States have different points of view: France said it would prefer a European directive, others agree with Mr McCreevy's pragmatic approach. MEPs are also divided on this issue (see bulletin mentioned above). The Ecofin Council will debate the matter in November. The professionals themselves are not unanimous in their positions, but even those who would, in principle, prefer binding European legislation would be prepared to accept the Commissioner's way and its objectives, as long as it was only a first step.
The experts stress that this post-trading issue is directly linked to stock exchange reorganisation and that the consolidated rules are necessary to retain Europe's competitiveness, by reducing investors' costs. In other words: this directly involves the Lisbon Strategy. It is not easy to excite citizens with topics like this, but the initiatives and debates confirm that Europe is moving and that projects are growing in number.
(F.R.)