Brussels, 17/07/2009 (Agence Europe) - Commissioned by the European Commission, research by British consultants Oxera reveals that the cost of stock market trading and clearing has fallen. “It shows that integration of markets is well under way but there is some further work to be done. The costs of cross-border transactions are still between two and six times more expensive than domestic transactions. At the same time, our analysis shows that using infrastructure providers has become cheaper, by up to 80% over two years,” commented Dr Luis Correia da Silva, director of Oxera, in a press release. The research will be used by the European Commission in its assessment of the impact of existing EU regulations to increase integration of the financial markets in Europe, viz. the MiFID Directive (2004/39/EC) on the financial markets and the 2006 clearing and settlement code of conduct (see EUROPE 9470 and 9301). Oxera will produce new research in the autumn of next year looking in greater detail at the impact of the cost reductions on institutional and retail investors.
The research shows that “volume is the single most important determinant of unit price.” “It is therefore highly likely that part of the explanation of the differences observed in the costs/prices of cross-border versus domestic transactions and holdings is the result of these economies of scale,” explain the authors. They also found that “costs are decreasing: as regards the data from providers of infrastructure services.” A comparison of information supplied by infrastructure service suppliers in 2006 and 2008 shows that the trading and clearing costs per transaction have fallen significantly, more so for central counterparty clearing houses than for central securities depositories. Ireland and Luxembourg specialise in cross-border and global trading.
The research covered 97% of securities measured in terms of annual value, and 18 European financial centres, divided into three categories: - major financial centres in Germany, Spain, France, Italy, Switzerland and the United Kingdom; - secondary centres in Belgium, Luxembourg, Norway, the Netherlands, Poland and Sweden; and other centres in Austria, Denmark, Greece, Ireland, Portugal and the Czech Republic. The research can be found at: http: //ec.europa.eu/internal_market/financial-markets/docs/clearing/ec_report_oxera072009.pdf (M.B./transl.fl)