(Newswire.net — October 19, 2017) — The European Post Trade Forum (EPTF) has been one of the leading groups tasked with managing the developments for post trade execution in the European market. In May 2017, the EPTF released a comprehensive study discussing the state of the post trade market and current initiatives of high importance. The EPTF is working with the European Commission to establish standards for the market and improve its efficiency.
EPTF
The EPTF was established by the European Commission in 2016. Its primary focus is on post trade operations in Europe and its objective is to support the work the European Commission is doing to improve and harmonize post trade operations for the European Union mainly through the Commission’s Capital Markets Union.
The EPTF’s May 2017 report seeks to provide an assessment of the current market landscape in order to support the efforts of the European Commission and its Capital Markets Union. In the report, the EPTF assesses previously reported on Giovannini Barriers which have been identified as barriers and bottlenecks in the past, needing to be addressed for better harmonization and efficiency. The Giovannini Barriers were published in two market reports in 2001 and 2003 by a European Commission working group led by Alberto Giovannini. The EPTF’s May 2017 report seeks to provide an updated observation on previous assessments made by the Giovannini working group, merging and modernizing them to become better known as EPTF Barriers.
The Post Trade Market
The post trade market being observed and more broadly regulated in the European Union encompasses numerous market aspects and activities. The primary focus of the EPTF and the European Commission is on activities following trading in the securities markets and derivatives markets which include clearing, settlement, asset servicing and post trade reporting. Additionally, post trade processes also under review include reporting to investment funds, securities lending transactions, repurchase transactions, collateral management services and support for primary issuance. All of these activities are currently being monitored and assessed for potential improvements and opportunities to create better harmonization across all European markets.
The EPTF Report
The May 2017 report from the EPTF primarily focuses on the merging of the final Giovannini Barriers established in 2003, with an updated and comprehensive list of EPTF Barriers. In its May 2017 report the EPTF lays out 12 top priority barriers and five watchlist barriers for additional oversight. The 2017 EPTF Barriers break the market challenges down into five categories and further reports on each of the category barriers. The 2017 EPTF Barrier categories include three operational barriers, four structural barriers, four legal barriers, one tax barrier and five watchlist barriers. Only two of the reported on barriers are given medium importance while the remaining barriers are all classified with high importance.
The report also discusses Giovannini Barriers that have been dismantled since initially introduced. These barriers include: access to clearing and settlement systems, absence of intra-day settlement finality in central securities depositories; national differences in settlement periods; and national differences in operating hours/settlement deadlines.
The EPTF also reports that barriers continuing to remain will be influenced by new regulations. Relevant regulations of primary influence to ongoing developments include: the European Market Infrastructure Regulation (EMIR), Central Securities Depository Regulation (CSDR) and Securities Financing Transactions Regulation (SFTR).
The EPTF’s Guidance for Post Trade
Consistent with investment service directives across Europe, the European Commission is actively working to harmonize and improve financial market operations throughout the European Economic Area. Its efforts for post trade have been channeled through the Capital Markets Union and the EPTF. The EPTF’s May 2017 paper fills a wide gap in the market’s regulatory guidelines by taking an assessment of the final Giovannini Barriers established in 2003 and merging them with the highest priority initiatives in the current post trade market environment. The establishment of 12 EPTF Barriers and five watchlist barriers makes the work of industry groups and regulators in enhancing market efficiency much more effective. The details of the May 2017 EPTF Report are currently being analyzed by the European Commission.