Friday, April 21, 2006
FT.com / Comment & analysis / Letters - EU infrastructure services companies should be run the way market wants
FT.com / Comment & analysis / Letters - EU infrastructure services companies should be run the way market wants: "EU infrastructure services companies should be run the way market wants
By Alberto Giovannini
Published: April 19 2006 03:00 Last updated: April 19 2006 03:00
From Mr Alberto Giovannini.
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Sir, Kurt Viermetz says ('No need to tinker with the integrated clearing model', April 13) that the broker-dealers who expressed criticism of antiquated and fragmented European market infrastructures are self-serving; they were expected to be so, and there is nothing wrong with that. Charlie McCreevy, the internal market commissioner, wanted to hear the honest, self-interested views of the users' community. They expressed self-interested comments on the fact that their own cross-border trading within the European Union is unacceptably cumbersome and expensive, and that with this market infrastructure the EU financial system is unlikely to develop much.
Why are broker-dealers so vocal? Because they are acutely aware of the costs they bear directly, and of the business potentials of a barrier-free EU financial market. Unfortunately, a very large chunk of the excessive costs of cross-border trading is borne by final buyers of investment funds, who cannot possibly be aware of the existence of such costs. The fund managers do not bear the costs directly: they charge them to the funds.
I share Mr Viermetz's call for the removal of the legal and tax barriers I have described in my reports. The removal of these and of the other barriers will make securities transactions really easy in Europe so that the intermediaries, whose costs Mr Viermetz rightly laments, will have a much smaller role than they have now.
The debate on infrastructure reform is not a fing"
By Alberto Giovannini
Published: April 19 2006 03:00 Last updated: April 19 2006 03:00
From Mr Alberto Giovannini.
ADVERTISEMENT
Sir, Kurt Viermetz says ('No need to tinker with the integrated clearing model', April 13) that the broker-dealers who expressed criticism of antiquated and fragmented European market infrastructures are self-serving; they were expected to be so, and there is nothing wrong with that. Charlie McCreevy, the internal market commissioner, wanted to hear the honest, self-interested views of the users' community. They expressed self-interested comments on the fact that their own cross-border trading within the European Union is unacceptably cumbersome and expensive, and that with this market infrastructure the EU financial system is unlikely to develop much.
Why are broker-dealers so vocal? Because they are acutely aware of the costs they bear directly, and of the business potentials of a barrier-free EU financial market. Unfortunately, a very large chunk of the excessive costs of cross-border trading is borne by final buyers of investment funds, who cannot possibly be aware of the existence of such costs. The fund managers do not bear the costs directly: they charge them to the funds.
I share Mr Viermetz's call for the removal of the legal and tax barriers I have described in my reports. The removal of these and of the other barriers will make securities transactions really easy in Europe so that the intermediaries, whose costs Mr Viermetz rightly laments, will have a much smaller role than they have now.
The debate on infrastructure reform is not a fing"
