In a speech delivered yesterday at a capital markets seminar in Madrid, Cruickshank welcomes the European competition commissioner Mario Monti's renewed efforts to identify and dismantle anti-competitive practices, but says this is only the beginning of the work to be done to reap the benefits of full-scale reform of Europe's clearing and settlement infrastructure.

"Interoperability - linking existing European clearing and settlement businesses to make cross-border investing and capital raising easier and cheaper - won't deliver enough. There are huge economies of scale to be passed on to users. Europe needs a structural solution," says Cruickshank.

In calling for reform, the London Stock Exchange chairman warns EU policymakers shouldn't be distracted by claims that individual equity markets are well served by silo structures in which exchanges control clearing and settlement businesses. According to Cruickshank, these structures restrict access for issuing companies and investors and protect the silos from competition.

He also states European clearing and settlement won't be resolved by action from either users or operators of the EU securities industry. Broker dealers pass through costs to investors and have other interests to protect. Most exchanges - with the notable exception of the London Stock Exchange - have stakes in clearing and settlement businesses that boost earnings and support their market capitalisation.

In his speech, Cruickshank also welcomes initiatives by the European Securities Forum (ESF) and the G30 Group. He says that the London Stock Exchange will work to persuade these groups that a structural solution is the way forward.

Cruickshank first voiced his support for the break-up of exchange clearing systems across Europe at the Royal Institute for International Affairs "Borderless Trading Conference" in April 2001.