Giovannini barriers
The Giovannini barriers are obstacles to increasing the efficiency of the international financial markets denominated in euros, which were identified and identified by the Giovannini Group, which was set up in 1996 in order to induce the European Commission to standardize the financial markets of the EU and to remove the obstacles. It was named after the chairman Alberto Giovannini (formerly Banca di Roma).
background
The Giovannini Group's fourth report, issued in November 2001, focused on the current situation and future developments for cross-border clearing and settlement arrangements in the EU securities markets (this document is often referred to as the first Giovannini report on EU clearing and settlement arrangements ). The report identified 15 “barriers” to efficient cross-border clearing and settlement to the extent that they pose additional risks and costs for investors operating in more than one national market. According to this report, a barrier is "a feature that significantly reduces the efficiency of clearing and settlement processes compared to a domestic transaction".
| barrier | designation |
|---|---|
| Barrier 1 | Elimination of national differences in IT and interfaces. |
| Barrier 2 | National restrictions (lack of freedom of choice) in the clearing and settlement area make the use of multiple systems necessary. |
| Barrier 3 | Differences in national regulations with regard to corporate actions , (beneficial) ownership and management ( custody ). |
| Barrier 4 | Lack of an intraday settlement finality. |
| Barrier 5 | Practical obstacles to remote access (cross border) to national clearing and settlement systems (e.g. legal disadvantage of foreign participants compared to national participants). |
| Barrier 6 | National differences in settlement cycles (t + 2, t + 3). |
| Barrier 7 | National differences in opening times / settlement deadlines. |
| Barrier 8 | National differences in securities issuing practice . |
| Barrier 9 | National restriction on the choice of the safekeeping of securities. |
| Barrier 10 | National restriction on the activities of primary traders and market makers . |
| Barrier 11 | Domestic withholding tax regulations, which serve to disadvantage foreign intermediaries (participants). |
| Barrier 12 | Transaction taxes that are withheld using a functionality that is integrated into the local settlement system. |
| Barrier 13 | Lack of an EU-wide regulation on handling owner interests in securities. |
| Barrier 14 | National differences in the legal treatment of bilateral netting in financial transactions. |
| Barrier 15 | Inconsistent regulations regarding the applicability of the respective applicable law ( conflict of laws ). |
Market participants have been slow to react to the November 2001 report, mainly due to the fact that there was no common approach among all participants concerned.
In the second Giovannini report on EU clearing and settlement agreements (April 2003) it was recommended that the barriers “should be replaced by a series of technical standards, market conventions, guidelines, regulations and laws, the provision of post-trade services in to enable a barrier-free environment ".
Organizations were involved to efficiently remove these barriers.
| barrier | task | Elimination through |
|---|---|---|
| Barrier 1 | Elimination of national differences in IT and interfaces. | SWIFT |
| Barrier 3 | Differences in national regulations with regard to corporate actions , (beneficial) ownership and management ( custody ). | EU Council, national governments, European Corporate Security Association (ECSA) , European Central Securities Depositories Association (ECSDA) |
| Barrier 4 | Lack of an intraday settlement finality. | ECSDA (coordination with ESCB and Committee of European Securities Regulators (CESR) ) |
| Barrier 6 | National differences in settlement cycles (t + 2, t + 3). | European Securities Forum (ESF) - ECSDA |
| Barrier 7 | National differences in opening times / settlement deadlines. | ECSDA (coordination with ESCB-CESR) |
| Barrier 8 | National differences in securities issuing practice . | International Primary Market Association (IPMA) and Association of National Numbering Agencies (ANNA) |
Barrier 1
Barrier 1 is unhindered technical access to clearing and settlement services in the member states of the EU. In some cases (for historical reasons) there are proprietary interface formats to central clearing and settlement systems in the individual markets. Although these are supported by most domestic participants, they represent an obstacle for foreign participants. This in turn means a loss of efficiency or an increase in costs in the area of cross-border securities settlement.
SWIFT was commissioned to "solve" the problem. SWIFT is currently trying to create communication standards and to determine how far the individual institutions are from them. A GAP analysis, so to speak.
Barrier 3
The individual work by market participants who contributed to the dismantling of Giovannini Barrier 3 was therefore replaced in summer 2007 by the establishment of the Corporate Actions Joint Working Group (CAJWG), which includes the most important groups, i.e. issuers, market infrastructures and intermediaries.
The aim of the CAJWG is to develop comprehensive market standards for the operational handling of all types of corporate actions, including transaction management.
The CAJWG consultation paper "Market Standards for Corporate Actions Processing" (revised version of March 30, 2009) provides the final agreement for the introduction of harmonized settlement days for corporate actions. As part of this harmonization, "Record Date" processing is to be introduced on European markets.
Barrier 4 & 7
Harmonization of opening times and settlement deadlines as well as intra-day settlement.
The Giovannini reports identified different opening times, holiday regulations and settlement cycles in the EU member states as an obstacle in the area of cross-border settlement. In barriers 4 & 7, reference is made to the inhomogeneous settlement times and system availability of the securities handlers, which can lead to delays in cross-border securities settlement.
To eliminate this, the ECSDA has developed standards to which the local CSD have committed. The key points of these standards are that:
- have all CSDs open on the opening days of the TARGET system. The CSD's securities settlement systems are currently open on all working days with the exception of 6 fixed public holidays per year
- these systems are available on these days at least from 7:00 a.m. to 6:00 p.m., with the last transactions against payment being processed at least until 4:00 p.m.
- the systems are real-time systems or that these systems carry out one processing run (batch cycle) at least every hour.
According to the last implementation report of the ECSDA, most CSDs now meet these standards. The extent to which these standards should also apply to commercial banks has not yet been clarified.
Barrier 11 & 12
The European Commission's Fiscal Compliance Group (FISCO) will advise the Commission on removing tax obstacles that arise in the settlement and settlement of cross-border securities transactions in the EU. Your primary goal is not to standardize tax rates, but to standardize the processes associated with tax processing (e.g. double taxation agreement, capital gains tax ...).
Barrier 13 & 15
As well as domestic custody account law may be organized, obstacles inevitably arise in cross-border securities transactions because the individual legal systems differ. The EU Commission set up the Legal Certainty Group to solve the problems. The group examines issues of legal uncertainty surrounding the integration of EU securities clearing and settlement systems. The basic idea is that the booking at the depot gives rise to certain rights of the depot holder. In addition to the Legal Certainty Group, there are two other international initiatives in particular. The Hague Securities Convention and the UNIDROIT Initiative.
Web links
Individual evidence
- ↑ Archive link ( Memento of the original from January 8, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
