The high profile G30 advisory group is reporting only patchy progress in international efforts to meet the 20 recommendations it laid down three years ago for improving global clearing and settlement systems.
In its final monitoring report, the G30 finds reform of the global clearing and settlement infrastructure as a work in progress, with improvements in some areas counterbalanced by difficulties in others. In particular, the report highlights significant challenges in synchronising payment and securities settlement systems on a global scale, the continuing presence of legal and regulatory obstructions to securities lending in many markets, and only limited progress in unifying messaging and reference data standards.
On this latter issue the G30 notes friction between the needs of the domestic and cross-border market users, and calls for greater efforts by market infrastructure operators and international institutions with global reach.
Andrew Crockett, Chair of the G30's clearing and settlement monitoring committee estimates the cost to market users of inefficiencies in cross-border clearing and settlement practices at some $10 billion.
The globalisation of the capital markets demands that the risks and costs of investing across borders is brought down, he states.
"Higher standards of technical performance are being put in place, better risk management practices are being adopted, and stronger governance is widely recognised as essential if we are to achieve a truly interoperable global system for securities clearing and settlement."
The G30 update coincides with the publication of research by the European Commission which estimates that joining up Europe's fragemented clearing and settlement infrastructure would increase economic output in the 25-nation bloc by EUR63 billion.
The Commission has threatened to impose legislation unless the securities industry takes steps to cut cross-border trading costs.
G30 executive summary:Download the document now 52.7 kb (Adobe Acrobat Document)