McCreevy Praises Clearing and Settlement Code; But Warns Last Chance for Private Solution

The private sector Code of Conduct on clearing and settlement has been very positive, said EU Commissioner for the Internal Market Charlie McCreevy, but at the same time he called on all infrastructures to fully respect and apply the Code in order to show that it can deliver competition. He reminded the industry that the Code is the last chance they have to prove that they are capable and mature enough to provide adequate solutions to the current issues. His remarks were delivered at a European Commission-European Central Bank seminar in Frankfurt.

The commissioner noted that the Code has significantly increased price transparency. There is now universal publication of fees, as well as much more clarity on discount and rebate schemes. Moreover, since the beginning of this year, services have also been unbundled and accounts will be provided on a separated basis.

But, he said that the main purpose of the Code is to facilitate greater competition in the post-trading sphere. He believes that there has been movement in the right direction on this front. The Code has injected momentum into the market. The appetite of post-trading infrastructures to go to other markets and to compete with incumbents has increased.

He pointed out that there are problems in the area of access and interoperability. While this is not a particular surprise because establishing links between infrastructures is a complex and time-consuming process, the issues do need to be sorted out in coming months.

Interoperability between central counterparties involves challenges for providers, users and regulators alike. Thus, he noted that all involved entities have a legitimate interest to study these issues in depth.

But he warned that endless foot-dragging is not going to be acceptable, either by incumbent infrastructures or their regulators. The Commission is monitoring the situation very closely to ensure that all actors involved respect the commitments of the Code, as well as broader obligations of, for example, a competitive nature.