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.