The Competition DG of the European Commission released a paper entitled, Competition in EU securities trading and posttrading, on May 24, 2006. The paper is a result of a fact-finding mission initiated by the agency to "better understand" the ssecurities trading markets and "to consider if competition is developed to its full potential or if certain barriers prevent it."
While recognizing that the European securities industry is already regulated, the paper unequivocally states that the industry "remain[s] subject to competition rules." Based on financial, legal, and documentary data from all parts of the industry, the agency made the following findings:
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that competition may be being impeded in a variety of ways;
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that access to fungible clearing arrangements is necessary for effectie competition and therefore must be assured on a non-discriminatory basis;
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that CCP services could - and probably should - operate in a competitive environment provided issues of interoperability are overcome;
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that vertical integration may result in foreclosure at all levels of the value chain and therefore lead to welfare losses;
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that although vertical integration may result in efficiencies, the Commission has seen no convincing evidence to substantiate this;
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that a combination of regulatory measures, appropriate action by the industry and the application of competition rules is likely to be the most efficient way of achieving integrated financial market structures; and
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that users and final investors have an important role to play in obtaining a competitive environment at all levels of securities trading and post trading.
The agency is inviting comments. Corporate counsel advising companies in the industry should avail themselves of the opportunity to submit comments. Several companies have already done so. The comments are available here.
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