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Finance

Financial markets infrastructure policy

The Commission aims to enhance the resilience of market infrastructure and to achieve an integrated, safe and efficient post-trade environment in the EU.

What is post-trading?

Post-trading refers to the activities that take place after an exchange of securities has been agreed upon. This includes clearing and settlement.

Clearing and settlement is the term used to describe the processes and the infrastructures required to finalise a transaction. These processes enable

  • transfer of ownership of the securities from the seller to the buyer
  • transfer of payment from the buyer to the seller

Efficient and safe post-trade infrastructures are a key element of a well-functioning financial market. If they don't work correctly, investors face more risks and higher costs.

Post-trading in the EU

Post-trade systems in the EU have developed nationally with different forms and different business practices. This fragmentation makes cross-border clearing and settlement more complex than it is at national level and creates costs, risks and inefficiencies for investors, institutions and issuers.

Some of the barriers to cross-border post-trading in the EU were identified over a decade ago in two reports issued by the Giovannini expert group. These reports identified 15 main causes of fragmentation and inefficiencies.

EU actions so far

Since the financial crisis, the EU has acted to remove the identified barriers by introducing

Together with the markets in financial instruments directive (MiFID), which regulates trading venues and other aspects of trade in securities, these measures establish common rules for systemically important market infrastructures.

Current work

Despite the progress achieved so far, there are still obstacles to EU post-trade systems and collateral markets reaching their full potential including

  • market inefficiencies
  • legal barriers
  • insufficient competition
  • low market confidence
  • an unlevel playing field

In 2015 the Commission action plan on building a capital markets union recognised the need for more action in this area including

  • reviewing the progress achieved in dismantling the Giovannini barriers
  • monitoring markets to ensure that legislation keeps pace with new developments

In February 2016, the Commission established the European Post-Trade Forum (EPTF) to help to review progress in removing barriers to cross-border clearing and settlement. The EPTF builds on the work of previous groups in the area of post-trade, including

A list of the main documents produced by these groups can be found below.

In August 2017, the EPTF published its report and the Commission launched a consultation on how to further reduce barriers to post-trade services across financial markets.

Documents

Reports published by the Giovannini group on cross-border clearing and settlement arrangements in the European Union (2001-2003)