Eurofi calls for stricter enforcement of post-trade rationalisation programmes

Eurofi calls for stricter enforcement of post-trade rationalisation programmes

European think tank Eurofi has called on the European Commission to institute tougher enforcement of settlement harmonisation and consolidation programmes aimed at cutting costs of cross-border post-trade services across the EU.

Eurofi says the current lack of integration between existing settlement systems in the EU means that cross border securities transactions are currently four to ten times more expensive than domestic transaction, generating additional costs estimated at around EUR2 billion a year.

The group is calling for tougher enforcement of interoperability projects and consolidation options and for EU ministers to define "a target for rationalising equities and bonds clearing operations".

"Ongoing developments are paving the way to more competition in trading activities but rationalisation efforts need to be carried out for post trading activities which represent a significant part of the extra costs," says the group in a statement. "European initiatives in this field are not bearing fruit as fast as needed as their implementation is not always stringent enough."

Eurofi points out that securities infrastructures are being restructured at a global level due to recent transatlantic mergers.

The proposals will be widely discussed by EU financial ministers and decision makers from the industry, governments and institution representatives during the Eurofi Conference which is taking place in Nice this year under the French EU presidency.

Eurofi says ministers should also examine extension opportunities of the Target2-Securities (TS2) platform.

In July this year the European Central Bank (ECB) said it was pressing ahead with plans to launch T2S, which will connect all clearing networks in the euro zone into a single platform, extending the payments system used for central bank operations to cover securities settlements.

The ECB believes an integrated securities settlement infrastructure in the euro zone could cut settlement costs by up to 90%. But the plans have angered the European Central Securities Depositories Association (ECSDA), which has argued that T2S would supplant services currently provided by its members.

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