bond yields reflect a growing integration of this market segment. as to the derivatives market, i do not have to recall here that eurex has become the largest futures and options market for euro denominated derivatives, breaking new trading records last year by transacting over 1 billion contracts. progress also occurred, although at less impressive rates, in the corporate bond and equity markets. the elimination of the currency risk has diminished the importance of the local component in the securities business, with institutional investors increasingly taking a pan - european view in investment decisions. the corporate bond market has developed strongly and witnessed a large increase in issues since the introduction of the euro, although part of this increase was due to temporary factors, such as corporate restructuring and the liberalisation of the telecom industry. over time, stock price variations in the euro area have become more sensitive to pan - european evolutions and new data and less to local informations and news. however, not all wholesale markets are equally fully integrated, the repo market being a particularly special case. participants in this market segment continue to trade preferentially with national counterparts and a significant share of the transactions are secured by national collateral. according to our data at the ecb, about 40 % of all cash lending and borrowing against securities is conducted exclusively at the national level. at this point, i would also highlight that the markets where integration has advanced the least are in the retail sector. in this area, there may well be structural explanations. for example, the proximity to the customer. i note that a great deal of market localisation is present in the u. s. in spite of the removal of barriers to intra - state and inter - state banking. according to a survey conducted by the federal reserve, more than 90 % of banks ’ clientele is located within a distance of less than 20 miles of the banks ’ premises. i am convinced that the potential developments in new technologies and financial innovation will continue to exert their influence both in europe and in the unites states and may well make geographical proximity to customers less relevant. public authorities also have a role to play in promoting the appropriate regulatory and supervisory environment that enhances investors ’ confidence in cross - border financial services. the integration of securities markets given these general considerations i would like now to focus on the securities markets. i believe that perhaps more than in any other field, the trading and post - trading services in the securities industry are good examples to illustrate the scope for further integration and how we can

contribute to it. let me start my discussion by stressing the importance of securities markets and the particular interest of the ecb. securities trading, clearing and settlement are indeed at the core of our financial system and any inefficiencies in these processes are bound to have important negative implications. when trading, clearing and settlement are too costly or complex, financial transactions are discouraged. this in turn would have negative effects on the allocation of capital, risk sharing across agents, and economic growth. on its part, the ecb has a particular interest in integrated securities markets because all central bank credit operations need to be fully collateralised. the functioning of the payment system and the implementation of monetary policy therefore crucially depends on a smooth and efficient working of the securities clearing and settlement infrastructure. unfortunately, reality is quite different and substantial barriers continue to exist to efficient crossborder clearing and settlement, as identified by the group headed by alberto giovannini. the european securities infrastructure today remains highly fragmented with over 30 national exchanges, about 20 national clearing and settlement institutions, and an additional 20 other systems in acceding countries. in this period of transition, we have to cope with a substantial degree of fragmentation of our securities infrastructure, which adversely affects market liquidity, leads to redundant investments in different systems, and requires additional layers of intermediation. compared to, say the us, where the infrastructure has been over time highly consolidated, the costs of securities settlement are greater in europe. although it is very hard to calculate the benefit that we could gain from consolidation and therefore the opportunity cost of the remaining fragmentation, there can be no doubt that it is substantial. i am of the opinion that there are good reasons to believe that integration in the european securities markets will accelerate in the future. the european trading and post - trading infrastructure is now in a period of consolidation, with technological and regulatory changes supporting the removal of barriers to the cross - border provision of services. the proposed new investment services directive should simplify the regulatory framework and increase the uniformity of securities regulation. it will also lead to the effective adoption the single passport concept and contribute to safeguarding issuers and investors ’ interests. this would also be supported by the provisions of the market abuse and prospectuses directives. the adoption of an appropriate set of international accounting standards, as well as the proposed transparency directive, dealing with disclosure requirements of listed companies, should equally enhance investors ’ confidence and uphold the transparency of european equity markets. overall, i also observe that