Cross-border securities settlement in Europe: Improvements so far

Abstract

The post-trade market in Europe is still fragmented. Differences in market practices have led to inefficiencies in a cross-border context. Integration of the European post-trade industry should lower cross-border settlement costs to the level of domestic transactions, while breaking down the Giovannini barriers by market parties should improve European Union (EU) clearing and settlement arrangements. This paper focuses on the efforts of the post-trade industry regarding the Giovannini industry-related barriers and what has been achieved so far. The market parties are well on track. The post-trade industry has introduced several standards and harmonised procedures to which they have committed themselves. Costs and prices of both domestic and cross-border transactions have come down. Regulation (Central Securities Depository (CSD) Regulation, Securities Law Legislation etc) can help to further improve efficiency in the post-trade environment and enhance market integration, in addition to the Eurosystem TARGET2-Securities (T2S) platform, which will provide cross-border securities settlement as of June 2015 in Europe in central bank money (e). Further harmonisation — both within and outside of the context of T2S — is needed, which ultimately should lead to more efficiency and lower costs in the EU.