The European Central Bank (ECB) is turning its attention to the often-overlooked mechanics behind securities markets. In a new article published in its Economic Bulletin, the ECB outlines a roadmap for harmonising post-trade processes across the EU.
Despite years of integration efforts, post-trade processes in the EU remain deeply fragmented. National differences in settlement practices, collateral frameworks, and asset servicing procedures continue to complicate cross-border activity. The ECB sees this as a fundamental obstacle to an efficient and truly European capital market.
While trading venues and issuance processes have gradually converged, post-trade remains stuck in national silos. These inefficiencies result, according to the article, in higher operational costs, increased risk, and reduced attractiveness for global investors, an issue that stands in stark contrast to the seamless infrastructure in the United States.
AMI-SeCo
To tackle this, the ECB and its Advisory Group on Market Infrastructures for Securities and Collateral (AMI-SeCo) have been working on a single set of standards for post-trade operations. The roadmap focuses on three pillars: securities settlement, collateral management, and asset servicing. Each has its own set of harmonisation targets and challenges.
In settlement, inconsistent legal regimes and operational processes continue to be a barrier. For collateral, national rules around eligibility and mobility hinder efficiency, especially at a time when collateral scarcity is a growing concern. And in asset servicing, corporate actions such as dividend payments or bond redemptions remain subject to local interpretations and timelines.
Implementation
The ECB is calling on both market participants and national authorities to take the roadmap forward. Implementation will demand coordinated changes to legal frameworks, market practices, and operational systems. But the potential payoff is significant: lower costs, reduced risks, and a post-trade environment better suited to support the CMU.
