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Trends in European Clearing and Settlement Industry - The European Code of Conduct and Target2-Securities

31 Pages Posted: 6 Jul 2008 Last revised: 4 Sep 2008

Torsten Schaper

Deutsche Börse Group

Date Written: February 15, 2007

Abstract

Despite many innovations and restructuring in the last years, the securities clearing and settlement industry in Europe is still said to be highly inefficient for cross-border transactions. This paper provides a fact based overview of the market, regulation, and recent developments that aim to improve the efficiency of clearing and settlement in Europe. The European code of conduct for clearing and settlement and TARGET2-Securities are identified as primary concerns in this industry. The code of conduct for clearing and settlement, initiated by the European Commission, intends to improve price transparency, interoperability, and service unbundling. The phased course of action of the code of conduct is presented. An analysis of the current implementation status of the code of conduct shows potentials for improvements. TARGET2-Securities, as technical platform for settlement of securities in Europe, provided by Eurosystem, could have a significant impact on the settlement of securities in Europe. The importance of the participation of all central securities depositories for the success of the platform is shown by a simulation. The different approaches for improving efficiency in cross-border clearing and settlement are compared with each other. TARGET2-Securities could create a monopolistic infrastructure for settlement which stands in contrast to the code of conduct.

Keywords: Securities clearing and settlement, Central counterparty, TARGET2-Securities, European code of conduct for clearing and settlement

JEL Classification: D40, F36, G20, L22

Suggested Citation

Schaper, Torsten, Trends in European Clearing and Settlement Industry - The European Code of Conduct and Target2-Securities (February 15, 2007). Available at SSRN: https://ssrn.com/abstract=965407 or http://dx.doi.org/10.2139/ssrn.965407

Torsten Schaper (Contact Author)

Deutsche Börse Group ( email )

Frankfurt, 60485
Germany

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