The London Stock Exchange has urged the European Commission to separate clearing and settlement provision from stock market operators and other trading platforms as a critical first step in ensuring the creation of a single cross-border utility.
The Exchange's comments are made in a published response to the EC's recent clearing and settlement consultation. The consultation was launched in May to discuss how existing market distortions, and barriers to efficient clearing and settlement arrangements within the EU, can be removed.
In a clear swipe at the recent take over of Clearstream by Deutsche Bourse, the LSE argues for the separation of clearing and settlement provision from exchanges or other trading platforms. The Exchange also derides alternative solutions, based on the interconnection of multiple clearing and settlement providers, as too inefficient.
"The best solution for European clearing and settlement is a single system - user-owned, user-governed and exchange-neutral - that can clear, net and settle all transactions in all securities across Europe," states the Exchange, pointing to the US and the Depository Trust Corporation as an example of a cost-effective single system.
The Exchange backs up its views with economic analysis commissioned from Oxera, which suggests that a single solution could provide users with savings of €1.6 billion per year in direct costs alone.
The Exchange urges the Commission to mandate open and equal access to clearing and settlement for exchanges and other providers of capital market services, and freedom for European companies to deposit their shares in the depositary of their choice.
States the LSE: "The overriding objective would be to allow a single European depositary to emerge, which is capable of holding all European equities and which would be a fundamental part of the single solution."