In order to avoid
regulatory arbitrage and related post-trade technical challenges, BlackRock,
Inc., the world’s largest asset manager, urged the European Securities and
Markets Authority (ESMA) to implement the Central Securities Depository
Regulation in a way that limits the scope of individual Member States to
deviate from the ESMA standards. In a letter
to ESMA, BlackRock emphasized that a
consistent regulatory framework is particularly important for exchange-traded
funds that are cross-listed in several European jurisdictions. Establishing the
same buy-in procedures or fail penalties notwithstanding the trading, clearing
or settlement venue would facilitate the European Single Market, noted the
comment letter, while providing end-investors consistency of outcome and
eventually reduced cost. Such harmonization can only be effective if the
penalties are only issued by one part of the market infrastructure, such as the
trading venue or the central counterparty or the central securities depository.
Currently, there can be multiple levels of penalty fails in addition to
different failed trade regimes, resulting in distortions across European
capital markets.
BlackRock pointed out
that it has a pan-European client base serviced from 22 offices across the
continent. Public and private sector pension plans, insurance companies,
third-party distributors and mutual funds, endowments, foundations, charities,
corporations, official institutions, banks and individuals all invest with
BlackRock.