Euroclear Bank, the international central securities depository (ICSD), and all of Euroclear’s CSDs in France, Belgium and the Netherlands as well as CrestCo (UK and Ireland) have each signed the code. It is designed to promote transparency of prices by requiring publication of service-provider price lists, access and interoperability, and unbundling of services and accounting separation.
Pierre Francotte, chief executive officer of Euroclear SA/NV, hailed the code “as a means to delivering greater transparency and access for users of European trading, clearing and settlement services [and] more quickly than a directive would have been able to achieve.” Potentially it saves years on a lengthy directive process that would have involved the European Parliament and Council of Ministers.
Other asset classes may also come under the ambit of the code. Denis Peters, a spokesperson for Euroclear in Brussels told FT Mandate that the ICSD and all the national CSDs of the Euroclear group “intend to extend the code from the same date that will apply to equities to all asset classes, including fixed income securities, to ensure continued momentum.”
Immediately after the European Commission’s official introduction of the code of conduct, Deutsche Börse, SWX Swiss Exchange/virt-x and SIS Group all threw their support behind the “market-led initiative”.
In theory, price transparency should help end users of infrastructure providers - clients and non-clients - to understand and compare prices of the services from such providers. A client of Clearstream would, for instance, be able to find out Euroclear’s tariffs even if they were not clients of the latter, and vice versa.
Could the code also pave the way for an actual reduction in post-trade costs in Europe, particularly cross-border transactions? Perhaps, but a day prior to the launch of the code of conduct Deutsche Börse released Q3 data showing that its settlement business (Clearstream) contributed 47.2 per cent €204.2m) to the exchange’s total revenues.
The three specific objectives outlined in the code must be implemented between the end of 2006 and the start of 2008, and will be “strictly” monitored by external auditors. Price transparency will need to implemented by the end of 2006, while unbundling and accounting separation by 1 January 2008.
Charlie McCreevy, EU internal market and services commissioner, in welcoming the new industry code of conduct, said it showed the industry’s “firm commitment” to transparency, interoperability and competition. The comments follow a speech last year in which he said it was “time for all interested actors…to put their collective foot on the gas”, or face intervention.
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