European financial regulators are to tone down proposed new standards on clearing and settlement in the face of fierce lobbying and sustained criticism from banks and industry bodies.
Last year, the European Central Bank in tandem with the Committee on European Securities regulators called for public comment on the application of 19 standards designed to enhance the safety, soundness and efficiency of the securities market infrastructure. The standards were originally drafted to address the activities of national securities depositories but had been widened to include the businesses of major custodian banks and share registrars.
The approach drew strong criticism from a group of agent banks led by BNP and Citigroup. They argued that they were already regulated for risk by banking watchdogs.
Speaking at a conference in London, Eddy Wymeersch, president of Belgium's Commission Bancaire et Financiere, said many of the complaints had been heeded and incorporated into a new draft of the standards which will be published shortly. He says the revisions will be discussed at a public hearing with the aim of adopting the new rules by April.
The European Commission's drive to harmonise clearing and settlement across Europe has been blunted by its own research which indicates that much of the additional cost incurred in cross-border trading owes as much to inconsistencies in tax and regulatory laws as to inherent industry inefficiencies. It has also been subject to strenuous lobbying from comepting vested interest groups, each with widely differing perspectives on the sources of structural deficiencies.
Last week, the European Securities Forum, which represents 22 large investment banks, outlined a three-year timetable for harmonisation and called on the Commission to legislate against exchange-owned depositories, such as Italy's Monte Titoli, Iberclear in Spain and Clearstream in Frankfurt.