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The Regulation of Cross-Border Clearing and Settlement in the European Union from a Legitimacy Perspective

  • Pablo Iglesias-Rodríguez (a1)
Abstract
Abstract

Post-trading activities such as clearing and settlement (C&S) constitute a central element in the integration of European financial markets. However, unlike other areas of financial services, C&S has received little legislative and regulatory attention and, as a result, important barriers to the cross-border provision of C&S services persist in the European Union. In order to remove some of these barriers, the financial industry created, under the auspices of the European Commission, the European Code of Conduct for Clearing and Settlement, a self-regulatory instrument aimed at achieving a smoother provision of cross-border C&S services. This paper uses the concepts of input/output legitimacy to analyse the Code's representative nature and effectiveness. It shows that, first, the Code has not received input from all the relevant constituencies potentially affected by C&S, and second, that there are serious threats to future compliance with the Code related to the competitive pressures of European financial markets. The paper also identifies the proposals to regulate C&S facilities at EU level as well as the new European supervision authorities in the financial field as elements which may highly contribute to the input/output legitimacy of cross-border C&S rules in the EU.

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* I am very grateful to an anonymous referee of EBOR for helpful comments and to Suzanne Habraken for her excellent editing work. The paper has benefitted from feedback from Philipp Kiiver, Panos Koutrakos, Luc Verhey and the participants in the Montesquieu Research Meeting at Maastricht University on 21 October 2010.

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European Business Organization Law Review (EBOR)
  • ISSN: 1566-7529
  • EISSN: 1741-6205
  • URL: /core/journals/european-business-organization-law-review-ebor
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