Prospects and challenges of a pan-European post-trade infrastructure.

After more than a decade of indecision, the European Union (EU) is finally now set to implement a consistent regulatory architecture for clearing and settlement. Following the agreement on a European market infrastructure regulation (EMIR), the European Commission has proposed harmonised rules for centralised settlement depositaries (CSDs), while the European Central Bank (ECB) is moving forward with its plans for a central eurozone settlement engine. After the regrettable circumvention of the 2006 Code of Conduct, the EU now will have a consistent framework allowing cross-border provision of services by and competition among clearing and settlement entities in the EU, with rules ensuring open access and interoperability. This situation will bring about a sea change in the sector, leading to further consolidation at the European level, as has also been witnessed in the area of trading platforms since the adoption of the investment services directive in 1993 and the Markets in Financial Instruments Directive (MiFID) in 2007. But important challenges remain in striking a balance between market efficiency and financial stability. [ABSTRACT FROM AUTHOR]