The European Central Securities Depositories Association (ECSDA) and the European Credit Sector Associations (ECSAs) have reported further progress in eliminating Barrier 3 identified by the Giovannini Report.
Barrier 3 is differences existing among member states of the European Union in the rules governing corporate actions, beneficial ownership and custody. The Giovannini Group advocated harmonization by the market of the various national rules and calls for information requirements and deadlines for the removal of the barrier.
Further to the publication in April of a report containing recommendations for the harmonization of cash dividends, ECSAs are now moving forward to the second phase of their plan by publishing a second set of recommendations focusing on interest payments and maturity redemption. These reports are available on each of the ECSA web sites.
Other corporate events will be studied and new sets of recommendations will follow. Phase three will focus on stock distribution and the publication of a set of recommendations on this topic is scheduled for the fourth quarter of this year.
The Giovannini Group, acting as advisory body to the European Commission, identified fifteen market practice, legal and tax barriers to an integrated clearing and settlement infrastructure for Europe.
The ECSAs are responsible for engaging the private banking sector in a Corporate Action Task Force (CATF) to identify the individual obstacles preventing efficient cross-border corporate action processing and to make proposals as to their removal.
They have adopted a three-stage approach to the removal of the obstacles. First, they will coordinate and promote the implementation of these recommendations at national level, through their member associations and banks. Secondly, they will monitor progress in the implementation of the measures at national level by means of annual reviews. Thirdly, they will monitor and assess progress country by country against the published set of recommendations.
A report on progress in implementing the cash dividend and interest payments and maturity redemption recommendations is scheduled for the summer of 2005. A report on the implementation plan for the recommendations is due end 2005 or early 2006.
The ECSAs are The European Association of Cooperative Banks (EACB), the European Savings Banks Group (ESBG) and the Fdration Bancaire Europenne (FBE).