An introduction to the European Post-Trade Market - Clearstream

5 Conclusion
THE EUROPEAN POST-TRADE MARKET
Conclusion
Over the last decades, the European post-trade industry has significantly enhanced its offering, reduced
risks, and achieved major efficiency improvements. Competition, innovation, and consolidation were
the main drivers for this development.
Regulation should support these drivers. It should aim to improve the industry’s capability to offer
innovative, safe, and efficient solutions to its customers. Comprehensive cost-benefit analyses are
needed to verify whether proposed regulation meets this criterion.
As advocated by the Giovannini Group, regulation aiming at improving the industry’s innovativeness,
efficiency, and safety in a cross-border context, is likely to be most effective if a joint effort by governments,
regulators, and market participants is taken and conducted in a staged approach. First, governments,
regulators, and market participants should co-operate to harmonise legal and tax regimes
across Europe, and to define common standards and formats for the transmission of data.
Thereafter, the implementation of interoperability and open access between all kinds of capital-market
service providers should be addressed. Realising technical interoperability and IT-supported open
access, before legal and tax regimes have been harmonised and common standards defined, would
imply excessive implementation costs for customers and providers of post-trade services, with respective
consequences for price levels.
The uncertainty surrounding upcoming regulation should be removed as fast as possible as it introduces
significant regulatory risk, resulting in a significant delay to investments, research and development
efforts, and the consolidation process of the industry. The post-trade industry is mostly a
scale business; hence, to exploit these economies of scale, further cross-border consolidation of the
post-trade industry would be beneficial.
Finally, adjacent services to the post-trade functions that are covered adequately by existing regulation,
such as prudential banking regulation for ancillary banking services, do not need double regulation.
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