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Tuesday 7 June 2011

Prepare to repel all borders! Says Captain Jack Sparrow

clearnetClearnet are evidently repelling all borders with a number of unknown organisations (but we can make a very good calculated guess at who they are) pitching to buy the Clearing House. This is a sensitive time for the securities industry as changes of a violent storm magnitude are destabilising the markets and making it difficult for financial services firms to plan or understand what they should be doing in the short to medium term. No pirating of the Clearing house should be allowed and it’s important that Governments make it clear that shanghaiing any clearing house is unacceptable.

Pressure is mounting from Investors, Governments and Regulators to have a cheaper and risk reduced European market in as short a time as possible. However, the EU securities landscape is made up of a series of vertical silos, evolved over centuries.

Business relationships are cemented with technical linkages and there are no end of commercial firms making some serious profit out of fragmentation in the markets.

Banks are not losing revenue or profit, as it is the end investor that foots the bill but it is detrimental to the EU in attracting international investment and trade, by maintaining such an expensive and inefficient set up.
LCH.Clearnet finds itself as an attractive proposition for many international firms looking to create a monopolistic silo and is a valuable jewel in the treasure chest beginning to emerge. It’s important that LCH.Clearnet is protected by the industry and Government due its pivotal role in the future, of establishing a more efficient clearing and settlement structure in the EU.

Other Clearing Houses, those independent and those affiliated to Stock Exchanges must also be protected until a firm decision is made on the EU Clearing House structure and a legally deliverable plan is made to establish a consolidation process where the survival of the fittest determines who wins. And like Jack Sparrow, other pirates or carpetbaggers should be repelled at all costs.

Gary Wright .

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