cyril roux : effective banking and securities regulation opening address by mr cyril roux, deputy governor ( financial regulation ) of the central bank of ireland, at the central bank of ireland conference on effective banking and securities regulation, dublin, 11 october 2013. * * * ladies and gentlemen it is my pleasure to welcome you here on behalf of the central bank of ireland to this conference on effective regulation of banking and securities. five years after the collapse of lehman brothers and four years after the g20 summit in pittsburgh which set out an ambitious agenda of banking and securities regulatory reform, it is timely that we ask : 1. what are our expectations of banking and securities regulation and to what extent are they likely to be realised? 2. whether the challenges of delivering a better financial services industry to the real economy requires more far - reaching changes than writing new rules and increasing supervisory oversight. 3. and if we have fully seized the opportunity to deliver safe supervisory oversight and soundness to the financing of economic activity? the topic of effective banking and securities regulation has indeed many dimensions. first, it operates at different levels : conduct of business, micro - prudential and macroprudential. in some cases, a single competent authority may have responsibility for regulation at all levels. in other cases, responsibilities may be given to a number of distinct authorities. whatever the regulatory architecture, there are challenges of managing conflicts of purpose and coordinating agendas. second, financial regulation has effects at a local level, national level and international level. a common approach to regulation is needed for it to be effective. restrictions on shortselling, high frequency trading or large bonuses may or may not make sense, but in any case they make very little sense within the confines of a single jurisdiction. third, banking and securities regulation use a variety of tools which operate on different planes : prudential rules on capital and liquidity ; corporate governance codes and fitness and probity standards ; prescriptive rules how client assets are held or investment assets are custodied ; minimum disclosure requirements and indeed rules on remuneration and fees. and so, the rule books which underpin banking and securities are quite different. to a certain extent, this reflects the fact that securities regulation attempts to deal with a host of relationships which link end - issuers with end - investors. by contrast, banking regulation typically focuses on intermediation conducted under the roof of a single institution. it has been said that the basic framework for securities regulation grew out of

securities, asset management, insurance and pensions, clearing and settlement and many other cross - cutting issues. the impact of the fsap on financial markets will, however, take time to manifest itself fully, and the focus now is on consistent enforcement and implementation across the union. there are a several reasons why the bank, and the scab, want to see more integrated euro financial markets. these include better and more efficient allocation of risk and capital, the smooth operation of the monetary policy transmission mechanism and of payment systems, and greater overall financial stability. the financial system plays a fundamental role in the transmission of monetary policy, and integrated european financial markets facilitate the implementation of the euro area's monetary policy. this is particularly relevant in the wholesale money and bond markets in which the ebb and the bank, through the scab, are involved. financial market integration should also contribute to greater financial stability, since a larger and more diversified financial system is better able to absorb economic shocks. a robust framework for securities clearing and settlement - the plumbing of the financial system - is also needed. this infrastructure lies at the core of all financial markets and is indispensable for their proper functioning. there are a number of private and public - sector initiatives under way to promote the integration, efficiency, and security of the european securities infrastructure. one such important initiative is the development of the " standards for securities clearing and settlement in the european union ". these standards have been drawn up jointly by the scab and the committee of european securities regulators ( cesar ). in the context of financial integration, the target system that commenced operations on the first day of monetary union was a major initiative and it has proved to be very successful. it was created by interconnecting the then - 15 national real - time gross settlement ( rags ) systems and the ebb payment mechanism. target was created to provide a safe, efficient and reliable mechanism for the settlement of cross - border large value payments in euro and to serve the needs of euro system monetary policy. the system settles payments in real time with immediate finality in central bank money, thus eliminating settlement risk between participants. it is uniquely wide in its coverage, with almost 1, 100 direct participants and more than 48, 000 banks - including branches and subsidiaries accessible through the system. last year, an average of more than 267, 000 payments with a value of eur1. 7 trillion were transferred through target per business day. this makes target - alongside the fed wire system