Both in the United States, through the Sarbanes-Oxley Act, and in Europe, at the level of the Commission as well as in Member States (I will only mention here the French Financial Security bill which is to adopted soon), a lot of work is being undertaken to address the problems that surfaced during the last three years in this field. I will limit myself to two comments that both evolve around the simple idea that co-ordination is crucial on these questions: ·  Financial services are increasingly delivered on a global scale. The regulation and oversight of financial markets can no longer ignore the reality that measures taken by any country may have consequences outside that jurisdiction. Hence the necessity for a reinforced dialogue between regulators, central banks and market participants as a means for managing regulatory spill-overs or frictions that otherwise could occur in highly interdependent and increasingly integrated financial markets, and more generally addressing global financial stability issues. Let me recall that structures such as the Financial Stability Forum already play a widely recognised role in fostering these exchanges and promoting co-ordination. Such a dialogue is all the more necessary between the US and European authorities, as  4  BIS Review 32/2003  they represent the main financial centres. In that regard, the recent initiatives undertaken by the EU authorities are welcome. This dialogue should be the beginning of a sustained and deepening process of mutual understanding, co operation and, above all, commitment on transatlantic regulatory equivalence.

The successful introduction of a broad range of pan European and sector-based indexes, and the subsequent launch of derivatives and new investment vehicles such as Exchange Traded Funds (or “trackers”) based on these new indices, highlights this change in investors’ approach. Empirical evidence suggests indeed that sector-related factors are playing an increasing role in price dynamics. As integration enlarges the range of potential investors, it also fosters the development of private equity and the financing of young and innovative firms, a trend that is obviously welcomed. 1.4 Behind the scene, supporting the evolutions that I just touched upon, market infrastructures have undergone radical changes. As an example, as regards trading infrastructures, the creation and expansion of EURONEXT is a striking illustration of the on-going consolidation process: the EURONEXT group now links the French, Belgian, Dutch and Portuguese stock markets, and has concluded co-operation agreements with several other European markets. The group also significantly increased its presence on interest rates derivatives markets. This ongoing movement of consolidation affects securities clearing, settlement and depository infrastructures, as providers aim to propose an integrated transaction service covering the entire securities processing cycle. In the field of post-market infrastructures, CLEARNET is pursuing its pan-European expansion by completing its operational integration throughout the EURONEXT area. The clearing house also reached an agreement with its Italian counterpart, enabling it to offer central counterparty services for transactions executed on the Italian government securities market.