The European Central Securities Depositories Association (ECSDA) and the various European banking groups – the European Banking Federation (FBE), the European Savings Banks Group, and the European Association of Co-operative Banks (EACB) – have published the first of a series of analyses and recommendations on the removal of the third of the fifteen barriers identified by the European Commission-sponsored Giovannini Group report into obstacles to efficient clearing and settlement of securities transactions in Europe.
The European Credit Sector Associations (ECSAs) and ECSDA accepted responsibility for leading the process towards the removal of Barrier 3, which is the differences between Member States in the rules governing corporate actions, beneficial ownership, and custody.
The Giovannini Group advocated harmonization by the market of the various national rules, and called for a deadline to be set for the removal of the barrier. The ECSAs have committed the private banking sector to a Corporate Action Task Force (CATF) charged with identifying the individual obstacles that prevent efficient cross-border corporate action processing and making proposals as to their removal.
In a three-stage approach, the Task Force is analysing corporate action processing and making relevant recommendations for the removal of obstacles; coordinating and promoting the implementation of these recommendations at national level, through their member associations and banks; and, finally, monitoring progress in the implementation of the measures at national level by means of annual reviews.
In the first phase, the Task Force examined the most frequent corporate action (dividend payments) and made recommendations for harmonisation. This report has just been published. An assessment of country-specific needs is scheduled for publication this summer, and a report on the implementation plans for the recommendations is scheduled for early 2006 at the latest.
ECSA/ECSDA says other corporate events are being studied and new sets of recommendations will follow in phase two and beyond. Priority is being given to interest payments and bond issue redemptions (where recommendations are expected before the summer) and stock distributions (where recommendations are scheduled for end-2005).