to promote the introduction of more efficient cross - sector procedures. market participants should not focus exclusively on the lucrative trading aspect of future innovations, but they must also speed up the development of convincing solutions for the processing of these new transactions. otherwise, financial stability will be jeopardised. financial market infrastructures and banks increasingly share roles differentiating between traditional financial market infrastructures and banks – which was straightforward 20 years ago – is becoming increasingly difficult. on the one hand, the major international banks, in particular, provide services that one would normally allocate to financial market infrastructures. for instance, their customer base is so large that it is possible for them to conclude and settle trade orders outside the stock exchange. the same holds true for the settlement of payment transactions : the larger a bank, the more payments it can settle directly through its own systems. these ‘ in - house systems ’ compete with the actual interbank payment system, especially if the banks ’ customers are banks themselves. on the other hand, operators of financial market infrastructures are expanding into the core business of banks. for example, a number of central securities depositories and their participants are providing loans and liquidity facilities. although this is done primarily to facilitate the settlement of securities transactions, the line of demarcation from traditional financial intermediation is becoming increasingly blurred. also, by granting remote access or by establishing more efficient connections between the individual central securities depositories, they are offering serious competition to the traditional custodians. technological progress has been the driving force behind this blurring of roles between financial market infrastructures and banks. technology has enabled large banks to break into the operational field of infrastructure operators without much additional expenditure. indeed, they have been virtually obliged to do so, in order to utilise their it platforms to full capacity and to run them efficiently. on the demand side, the smaller financial institutions also benefit. as they outsource their back office functions to larger banks or specialised institutions, they can better focus on their core business. the infrastructure operators, in turn, are finding themselves in a situation where hardly anyone is willing to pay for traditional transaction services that have taken on a commodity character. consequently, they are diversifying and providing services that generate a higher added value. those infrastructure operators that are organised as profit - oriented public companies, in particular, are likely to further intensify competition with the banks in the future. this development is confronting the regulators with new challenges. many supervisory and oversight

niklaus blattner : global trends in financial market infrastructures and their significance for financial stability introductory remarks by mr niklaus blattner, vice - chairman of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 14 december 2006. * * * developments at banks and financial markets are subject to extensive daily media analysis and commentary. by contrast, financial market infrastructures, i. e. stock exchanges, payment and securities settlement systems, only rarely make the headlines. i have decided to shift the focus today and concentrate on financial market infrastructures. in particular, i wish to highlight some interesting global trends and assess how these trends impact on the stability of the financial system. internationalisation of financial market infrastructures traditionally, most financial market infrastructures have a strong national focus. this made sense as long as the financial markets also had a strong domestic focus. however, the deregulation and liberalisation of financial markets and the associated increase in cross - border financial flows resulted in a widening gap between financial markets and financial market infrastructures, with the latter remaining constrained within national bounds. more internationalisation of financial market infrastructures became inevitable in order to avoid a loss of competitiveness due to inefficiencies. this process of opening up market infrastructures still continues today. we can differentiate between different types of internationalisation. first, direct access to infrastructures that used to be reserved exclusively to domestic participants is now being granted more frequently to foreign participants as well. swiss interbank clearing, for example, has admitted participants from abroad since the late 1990s. second, the consolidation of infrastructures is in full swing, especially in europe. in some cases, consolidation takes place through mergers between formerly independent systems. for example, euroclear group integrated the formerly independent central securities depositories of the netherlands, belgium, france and the uk. in other instances, consolidation takes a less direct form. national infrastructures may, for example, set up mutual links to facilitate trade, i. e. the settlement of cross - border transactions. the internationalisation of stock markets has also made it possible to trade an increasing number of stocks on several different trading platforms. and finally, we have also witnessed the emergence of a few completely new infrastructures which have adopted an international – and in some cases even global – focus from the outset. a classic example is the continuous linked settlement ( cls ) system, which was designed for the settlement of foreign exchange transactions and