Mr President, my compliments to Mr Andria for this report on the Commission communication to Parliament and the Council dealing with policy issues and the future challenges of clearing and settlement in the European Union, the process through which transfer of ownership takes place in a securities market. This communication builds on the Giovannini report of November 2001, which identified many sources of inefficiency in cross-border clearing and settlement arrangements within the European Union. It is essential to manage the potentially high risks of clearing and settlement systems effectively, to ensure the stability of the financial system. With the increased demand for foreign securities since the introduction of the euro, our infrastructure for clearing and settlement of cross-border transactions remains fragmented, resulting in much higher costs than with national transactions. In this report we are presented with proposals to remove the barriers and distortions in the European Union post-trading environment, to create a level playing field between institutions, a common regulatory view and the development of rights of access and choice. Pan-European infrastructures are essential to an integrated financial market, with market participants, regulators and competition authorities all playing a role. We know the European Union has already accepted natural monopolies in certain service areas such as gas, electricity and air traffic control to ensure fair access to all users in the single market. Now the same principle must be applied to post-trading infrastructure. But – and I enter a very strong caveat here – it is very important for the effect of consolidation on competition and financial stability to safeguard prices in what will, de facto, be a less competitive arena. In concentrating the services in one or two main players we must be sure that we do not risk security in the event of institutional collapse. Proper safeguards will be needed. The American model is obviously an attractive template. It is very efficient in its delivery of cost-effective clearing and settlement. But such radical departure from our present systems of up to 20 central security depositories and very different legal frameworks would probably make it very difficult to achieve. While a lot more work is needed prior to any legislative initiative from the Commission – and I welcome Commissioner Bolkestein's offer of a second round of consultation – the Committee on Economic and Monetary Affairs has laid out its stall, proposing separate core settlement services as a user-owned or public service, governed by the rules of non-profit status. It wants a specific directive on clearing, on the one hand, and settlement on the other, laying down common rules on authorisations, supervision and a common framework amongst others. An early step will no doubt be the revision of the investment services directive which provides for the possibility of choice of systems for post-trading activity. There is certainly a long and fraught road ahead, with different banking cultures and legal systems, but there can be no doubt about the bottom line: without provision for efficient cross-border clearing and settlement, the full benefit of an internal market for financial services cannot be realised.

Political group: PPE-DE