The Joint ECB-Commission conference on “Post-trade harmonisation and financial integration in Europe” brought together more than 200 delegates from the financial industry in Frankfurt on March 19. Mario Draghi, President of the European Central Bank, gave the welcome address, focusing on the importance of harmonization to shape the European post-trade infrastructure and define an integrated European financial market.
Steven Maijoor, Chairman of the Securities and Markets Authority, commented on the role of the crisis, noting that, to an extent, it provided the momentum to create a single market for the post-trade environment.
Commenting on the evolution of the European settlement market infrastructure, Jean-Michel Godeffroy, Chairman of the T2S Board, said, “I picture the new European model for securities settlement as the result of three streams that are flowing in parallel and will ultimately merge into a single river, changing the surrounding environment. These three streams are T2S, post-trade harmonization and the CSD Regulation.”
Diana Chan, CEO of EuroCCP, joined a panel on post-trade harmonization in an environment of increasing collateral needs. Fellow speakers included Patrick Pearson, Head of Financial Markets Infrastructure for the European Commission. “The key is for service suppliers to work together and embrace competition,” said Chan. Noting that it is essential to never forget the customers, she said, “Customers want simplicity.”
DTCC also participated in TradeTech Europe, the largest annual European conference for equity trading and technology, which took place in London April 16-18.
A panel on the purpose and value of capital markets and the changing roles of market players consisted of Chan and other industry leaders, including Tim Rowe, U.K. Financial Conduct Authority; Paul Bowles of Thomson Reuters; and Michel Seigne of Goldman Sachs.
The panel agreed that market changes driven by regulation and technology offer opportunities that should not be stifled by fear of the unfamiliar. Rowe acknowledged that regulators often play a reactive role, trying to catch up on evolution in the industry. He also said, “One concern of ours in the U.K. is the extent to which regulators take away choice.”
Commenting on the impact of regulations on the market environment, Chan said, “The push of OTC [over-the-counter] business into clearing provides opportunities for exchanges to capture some of the trading flows. So while regulation may lead to the closure of some businesses, it provides opportunities to others.”
Chan also addressed the key challenges facing capital markets, drawing attention to a threat to the markets that receives scant attention. ”We’ve talked a lot about trading, but what has been missing in the discussion so far is the state of the primary markets,” she said. “Companies need to come to market for people to have something to trade.”