Brussels, 07/11/2006 (Agence Europe) - Presenting the EU clearing and settlement industry's voluntary code of conduct to reporters on Tuesday 7 November, EU Internal Market Commissioner Charlie McCreevy said it was a first step and the system was up and running to establish an effective European financial market. He said the code of conduct would have a positive impact, leading to cost savings in clearing and settlement that should lead to clear macroeconomic improvements through greater transaction volumes and a positive impact on market liquidity (and thereby on the cost of capital). Seeing the code as an important test for the credibility of the European Commission's 'Better Regulation' drive, Charlie McCreevy said he was confident that publication of the code of conduct would lead to faster clearing and settlement than if a different, longer and more risky approach had been taken, namely launching a draft directive at a time when the market is in a state of flux.
Signed by the Federation of European Securities Exchanges (FESE), the European Association of Central Counterparty Clearing Houses (EACH) and the European Central Securities Depositories Association (ECSDA), the 'Code of Conduct for Clearing and Settlement' covers three areas: price transparency by the end of 2006; standard unilateral access between organisations and interoperability by June 2007; and service unbundling and account separation from January 2008 onwards. Charlie McCreevy said the code of conduct would initially only apply to securities, but would be extended as soon as possible to obligations and derivatives. The European Central Bank, the European central banking system, the Committee of European Securities Regulators (CESR) and national governments and investors all back the code of conduct approach. France has indicated on several occasions, however, that it would prefer to see the immediate launch of EU legislation.
Acknowledging that self-regulation is not wholly risk-free, the Commissioner said his department would be closely monitoring application of the code of conduct in practice through regular meetings with operators. McCreevy said the target of an integrated European clearing and settlement industry required joined-up thinking and efforts from industry to tackle obstacles identified at the time of the Giovannini Report, with Member States and national regulators continuing with unnecessary legal and tax differences. (mb)