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EU infrastructures have not yet reached a sufficient level of integration to provide effective support to the single financial market, especially in the fields of securities clearing and settlement, and retail payments, Gertrude Tumpel-Gugerell said. “More must be done to ensure the reliable functioning and resilience of market infrastructures”, she said warning that there is no room for complacency.
European infrastructures for securities clearing and settlement, as well as those for retail payments, remain highly fragmented, which makes cross-border transactions in these areas very costly, she said.
The ongoing turbulences in financial markets underscore the importance of not just continuing but of stepping-up financial integration efforts, Tumpel-Gugerell noted. “We should not use the financial market turbulence as an excuse to put SEPA on hold”, she warned.
Also, the failure of a clearing, payment or settlement system is likely to cause major disruption to the underlying trading processes, thus putting wider financial stability at risk.
“The boundaries between financial institutions and market infrastructures are blurring, the interdependencies between payment and settlement systems are increasing, and new challenges in terms of the safety and resilience of payment and settlement systems are continuing to emerge.
The integration of EU infrastructures also needs a consistent regulatory framework, Tumpel-Gugerell noted. In
Ø First, there is broad agreement on the need for more than one CCP solution for CDSs, given the importance of competition for the efficient functioning of CDS markets.
Ø Second, there is consensus that at least one CCP for CDSs should be located in
Ø Finally, it is widely agreed that cooperation between the relevant authorities is of the utmost importance to ensure that the different CCPs will be robust and that competition between them will not lead to a “race to the bottom”.