The European Central Bank (ECB) has today published the Eurosystem’s response to the European Commission's Communication of 28 April 2004 on clearing and settlement. This Communication outlined the measures the Commission intended to take to improve clearing and settlement arrangements within the European Union. The Commission invited all interested parties, in particular the ECB, to provide comments on its Communication by 30 July 2004.
The main points of the Eurosystem’s response are as follows:
In general, the Eurosystem welcomes the initiatives specified in the Communication. In particular, the Eurosystem supports the adoption of a framework directive on clearing and settlement: first, a directive can complement the market-led removal of the “Giovannini barriers”, which is a necessary condition for competition to come fully into effect; second, the effective and consistent implementation of the ESCB/CESR standards may require changes to the national legal framework that lie outside the power of national supervisory authorities.
In the light of the responsibilities and tasks of central banks for a safe and integrated securities infrastructure, the Commission is invited to refer explicitly to the responsibilities and tasks of the Eurosystem.
In line with the four-level approach embodied in the “Lamfalussy procedure”, the framework directive should set up only high-level principles to be concretised by level two implementing measures. The ESCB/CESR standards might form the basis of such level two measures, and the ESCB/CESR working group that has already been established should be given a formal mandate as a level two committee.
The Commission is invited to take note of the specific needs of the Eurosystem. In particular, the Eurosystem expects that the integration process will help to develop an efficient domestic infrastructure for the euro. As the Governing Council of the ECB already emphasised on a previous occasion (see the policy statement of 27 September 2001 on “the Eurosystem's policy line with regard to consolidation in central counterparty clearing”), the domestic market infrastructure for the euro should be located in the euro area, as is the case with core infrastructures in other monetary areas.
The Eurosystem takes note that the Commission intends to be neutral as regards the opportunity for securities clearing and settlement systems to offer intermediary and/or banking services. The Eurosystem would like to underline the importance of both the neutrality principle and the need for appropriate safeguards to ensure that any risks are properly managed.
The Eurosystem shares the Commission’s view that a framework directive on clearing and settlement should address the adoption of an appropriate oversight and supervisory framework covering all relevant service providers. Whether or not this framework should be based on the home country principle and a coordinating authority depends on a range of different factors and needs to be adjusted to the specific case. Therefore, the Eurosystem invites the Commission to concentrate on high-level requirements for cooperation.
The full response can be downloaded from the ECB’s website:
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