The Exchange welcomed the Commission's intervention based on an open public consultation. The key points of the Exchange's response, supported by detailed economic analysis, are:
- 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. The DTCC in the USA is an example of how it is possible to establish a single system, which is cost-effective, innovative and able to manage systemic risk.
- This is a necessary step towards allowing effective, pan-European competition between exchanges and other providers of capital market services.
- The benefits would be lower transaction costs and potentially better diversification of risk for investors. Companies would also have lower costs of capital and easier access to a wider spread of investors. The Exchange's analysis suggests that a single solution could provide users with savings of €1.6 billion per year in direct costs alone.
- Alternative solutions based on the interconnection of multiple clearing and settlement providers - 'interoperability' - would not deliver the most efficient solution for Europe. Only a single system can do that.
- However, the market is currently too distorted by cross-ownership of exchanges and clearing and settlement providers - 'vertical silos' - for the Exchange to be confident that market forces alone will deliver the best solution.
- Open and equal access to clearing and settlement for exchanges and other providers of capital market services.
- Require that clearing and settlement providers' prices and commercial terms are transparent, fair and non-discriminatory.
- Separation of clearing and settlement provision from exchanges or other trading platforms.
- Freedom for European companies to deposit their shares in the European depositary of their choice. 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.
