Deutsche Börse: Overhaul Of EU Paper On Securities Settlement - Regulation Should Set Proper Focus And Consider All Aspects

Prior to the meeting of the European Commission, which intends to publish its communication on "Clearing and Settlement in the European Union" on Wednesday, Deutsche Börse has welcomed the Commission's efforts to boost the integration of the European financial services markets. At the same time, Deutsche Börse is urging the Commission to ensure that any possible regulation focuses on the right issues, in other words, that it aims at reducing the costs of cross-border securities transactions and encompasses all of the relevant business areas and market participants.

According to Deutsche Börse, the regulation should not be confined to settlement organizations, but also extend to custody activities, which are predominately performed by banks and account for a large proportion of the costs involved in cross-border securities transactions. In addition, all market participants should be subject to the same requirements, in line with the notion of a level playing field. The obligation to provide open access to systems should apply for all market participants and should take factors such as profitability and technical feasibility into consideration.

Deutsche Börse rejects the establishment of a legal form for financial service providers (utility or profit-oriented company) by means of an EU ruling, preferring a system that allows the markets to decide. It does not see any evidence of a supposed monopoly position that could lead to competitive handicaps or imply the legal form of a utility company.

In addition, Deutsche Börse is requesting the removal of CCP clearing from the ruling, arguing that central counterparties are not classed as post-trading activities (securities custody and management) and can therefore be left out.