The voluntary guidelines form a major deliverable under the timetable established by the European Code of Conduct for Clearing and Settlement signed by market participants in November 2006. They were delivered to the Commission on 28 June 2007 in advance of the deadline of 30 June 2007 established by the Code of Conduct.

The Guidelines were negotiated through joint meetings of the three main trade associations (Federation of European Securities Exchanges, the European Association of Central Counterparty Clearing Houses and the European Central Securities Depositories Association).

The formulation of the Code followed the threat of legislation from the European Commission, which has been pushing the industry to abolish anti-competitive practices and remove cross-border barriers to share trading across Europe. The politicos have been supported in their push by large investment banks, concerned about the high costs of clearing and settlement across borders.

Joël Mérère, the chairman of ECSDA says: "These Guidelines are an important landmark in the development of securities settlement in Europe showing that a market approach can be far more effective than legislation in delivering quick and effective change. The guidelines should enable the delivery over time of real competition between settlement systems, through access and interoperability, on an open and transparent basis."

A European Commission source says the EU executive is set to largely endorse the guidelines on July 11.

The creation of the guideline follows steps taken at the end of 2006 to improve price transparency. The next phase of the Code, to be implemented by the end of 2007, involves unbundling services and separating the accounts of each service segment. This is largely aimed at the practice of siloed operators such as Deutsche Börse, which operate a vertically integrated model for trade execution, clearing and settlement.

Frank Gerstenschläger, member of the executive board of Deutsche Börse, comments: "Deutsche Börse Group fully supports the Code of Conduct for Clearing and Settlement of cash equities. The Code demonstrates the willingness of trade and post-trade service providers to work constructively toward an efficient environment for cross-border trading in Europe."

Read the full text of the Guidelines: