The Giovannini Group was a group of financial market experts, formed in 1996 to advise the European Commission on financial market issues. In particular, the work of the Giovannini group focused on identifying inefficiencies in EU financial markets and proposing practical solutions to improve market integration.
The Group’s two reports identified a total of 15 specific barriers that prevent efficient EU cross-border clearing and settlement.
T2S will help reducing the following barriers:
|Giovannini barrier||Will T2S contribute in removing it?|
|1. National differences in information technology and interfaces||Yes|
|2. National clearing and settlement restrictions that require the use of multiple systems||Yes|
|3. Differences in national rules relating to corporate actions, beneficial ownership and custody||Yes|
|4. Absence of intra-day settlement finality||Yes|
|5. Practical impediments to remote access to national clearing and settlement systems||Yes|
|6. National differences in settlement periods||No|
|7. National differences in operating hours/settlement deadlines||Yes|
|8. National differences in securities issuance practice||No|
|9. National restrictions on the location of securities||No|
|10. National restrictions on the activity of primary dealers and market makers||No|
|11. Domestic withholding tax regulations serving to disadvantage foreign intermediaries||No|
|12. Transaction taxes collected through a functionality integrated into a local settlement system||No|
|13. The absence of an EU-wide framework for the treatment of interests in securities||No|
|14. National differences in the legal treatment of bilateral netting for financial transactions||No|
|15. Uneven application of national conflict of law rules||No|
The barriers are three-fold and cover technical, legal and fiscal differences between EU/EEA countries, which make it difficult for service providers to extend their reach beyond their home country.