European market users call for break-up of siloed exchanges

European market users call for break-up of siloed exchanges

Investment banking groups across Europe have called on the European Commission to enforce the separation of stock exchange trading from clearing and settlement provision by breaking up 'vertical silos' such as those operated by Deutsche Börse, Borsa Italiana and Spain's Bolsa.

The joint statement issued by the French Association of Investment Firms (AFEI), the Italian Associaton of Financial Intermediaries (Assosim), the French Banking Federation (FBF) and the London Investment Banking Association (Liba), claims to set out the clear position of market users on the principles which should be applied to the consolidation of stock exchanges and central market infrastructures.

In particular, they are calling on Brussels to take action to dismantle the integrated silos for trade execution and clearing and settlement developed by some of the region's leading bourses. Such action would remove "competitive distortions" and pave the way for the emergence of a "single and dominant pan-European infrastructures both for clearing and settlement".

The paper urges the "the imposition of the unbundling of the vertical silos" if private stakeholders do not start the process on their own.

The vertical model for trading, clearing and settlement has been a cause for concern among competition watchdogs in Europe. In a ruling last week, the UK's Competition Commission says that Euronext and Deutsche Börse would have to ensure the independence of the London Stock Exchange's clearing services provider if they want to take over the Exchange.

In September, the European Union internal market commissioner Charlie McCreevy warned the securities industry that it must do more to cut costs for cross-border EU trading or face regulation. He is expected to table proposals in April.

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