19 February 2007
New City report on the European post-trading industry
The City of London today (19 Feb) publishes "The European
Equities Post-Trading Industry: Assessing the Impact of Market and
Regulatory Changes", a report by NERA Economic Consulting, as a
further contribution to the ongoing EU debate on post-trade
clearing and settlement services.
While critical work continues on the implementation of the EU
Code of Conduct, this report analyses the Working Document the
European Commission produced in May 2006 to quantify the potential
benefits of a post-trade directive.
Today’s report suggests that in drawing together often quite
disparate pieces of prior analysis, relying on different data sets,
the Working Document might not have made all of the adjustments
necessary to compensate for these differences. The report goes on
to make some suggestions as to how such adjustments might be
undertaken.
Welcoming the research, the City of London’s Chairman of Policy
Michael Snyder said: "It is widely recognised that clearing and
settlement, the post trading industry which provides the
infrastructure for financial markets, has yet to maximise the full
benefits of the single market.
"Two earlier reports in our City Research Series have shown that
Europe lags behind the US in cost terms, and have suggested
industry-led means by which this gap could be closed. We have
therefore been extremely heartened by Commissioner McCreevy’s
approach, and have welcomed the launch of the Code of Conduct and
the ongoing work on its implementation."
The authors of today’s report make it clear that the underlying
problem in assessing the potential case for a post-trading
directive rather than a Code of Conduct is not one of methodology,
but of the lack of data.
The authors find that it is crucial to consider the question of
post-trading in the larger context of integration of all parts of
the financial market infrastructure and how changes and
consolidation in other parts of the value chain can and have
affected the post-trading industry's cross-border trading. They
conclude that this means that removing the barriers to cross-border
trading may not lead to the higher levels of trading anticipated by
the Commission.
"Their key conclusion is simply that as the Commission embarks
on the next stage of its quest to produce a more precise estimate
of the economic impact of changes in the post-trading industry, it
should seek to employ country-specific and market-specific data
wherever possible," said Michael Snyder.
"We trust that this report will assist both the Commission and
the industry in moving towards the shared goal of more efficient
and cost-effective infrastructure provision by highlighting the
central importance of the availability of accurate information to
achieve this objective.
"The industry should do all it can to ensure that the Commission
has access to all the price, cost and volume data it requires to
complete its work."
Ends
Notes to editors
Copies
of the report and all the City of London’s previous
research.
For further information contact: Rebecca Sandles at the City of
London Press Office on 020 7332 1906 or by
email.
About the City of London Corporation:
The City of London provides local government services for the
Square Mile, the financial and commercial heart of Britain, and is
committed to maintaining and enhancing the status of the business
City as the world's leading international financial and business
centre through its policies and services. Its responsibilities also
extend far beyond the City boundaries and include management of the
Barbican Centre, Central Criminal Court at the Old Bailey, 10,000
acres of open space including Hampstead Heath and Epping Forest,
three wholesale food markets, as well as acting as the London Port
Health Authority.
About NERA Economic Consulting
NERA Economic Consulting is an international firm of economists who
understand how markets work. It provides economic analysis and
advice to corporations, governments, law firms, regulatory
agencies, trade associations, and international agencies. It
operates in more than 20 offices across North and South America,
Europe, Asia, and Australia.
Contact: David Ellis, Associate Director. +44 20 7659 8854.
david.ellis@nera.com