|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
Bankers Welcome EU Call To Bring Down Costs Of Securities Dealing
Staff Writer – Financial Times
Securities Mosaic. September 14, 2005
_________________________________________________________________________
EXCERPT: Yesterday's call by a top European Union official for moves to cut securities dealing costs was warmly welcomed by bankers and other industry officials who have been lobbying behind the scenes for months for just such a statement. Charles McCreevy, the EU's internal market commissioner, warned yesterday of legislation to unblock the plumbing system that links European exchanges to one another unless participants began to do it for themselves. "Mr McCreevy is striking the right note at the right time," said Alan Yarrow, chairman of the London Investment Banking Association, and a vice-chairman at Dresdner Kleinwort Wasserstein. "He is helping the market move in the right direction." LIBA members, who represent some of the world's largest investment banks and are the biggest customers of the securities exchanges, have repeatedly called on the EU to smooth the interface between the region's many clearing systems. In particular, LIBA and similar trade associations in France and Belgium have urged Brussels to prod the majority of Europe's stock exchanges, which own the post-trade services that their customers must use to complete each deal, to split trading and post-trading services into separate entities, with the post-trading services to be owned by customers. That is the model that is used in the US, and is widely viewed as the primary reason that all-in trading costs in equities there are as little as one-sixth to one-eighth those of cross-border equities trading in Europe. Clearing is the engine room of securities trading where bargains are confirmed, matched and instructions sent to custodians and agent banks. Settlement concerns the actual delivery of securities to a new owner and payment to the seller. The so-called vertical silo - in which the stock exchange owns the clearing and settlement services - requires investors who buy shares on an exchange outside their home country to route transactions through several intermediaries, each of which charges a fee. Vertical silos have been elevated into the public eye since the possible bids for the London Stock Exchange - which does not have post-trade services - by Euronext and Deutsche Borse. |
|
|
