Banks Push For Break Up of European Exchanges

An alliance of banks urged the European Commission Monday to put an end to the rule of Europe's giant exchanges, contending that exchanges that govern both trading operations and clearing and settlement stifle competition. These banks want the European regulator

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An alliance of banks urged the European Commission Monday to put an end to the rule of Europe’s giant exchanges, contending that exchanges that govern both trading operations and clearing and settlement stifle competition.

These banks want the European regulator to target Germany’s Deutsche Boerse, Italy’s Borsa Italiana and Spain’s BSE. Instead, the group is calling for a Pan-European clearing infrastructure they claim “would bring significant benefits in terms of increased efficiencies and cost of savings, which would contribute to a decrease in cross-border transaction costs.”

“Silos create potential for severe competitive distortions,” says a joint statement issued by the London Investment Banking Association, the Italian Association of Financial Intermediaries and the French Association of Investment Firms.

The banks bringing the petition are among some of the largest and most powerful banks in the market. They say they support the “imposition of the unbundling of the vertical silos if private stakeholders do not start the process on their own.”

The group claims that overreaching exchanges hike the cross-border trading costs, making the cost too high when one counterparty lies outside the exchange’s domestic market.

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