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The Giovannini Barriers


One EU Commission initiative aimed at the integration of the capital market was the creation of a group of experts known as the Giovannini Group. The results of the work of the Group were presented in two reports published in 2001 and 2003 (The First Report of the Giovannini Group (2001): "Cross-border clearing and settlement arrangements in the European Union", and the Second Report of the Giovannini Group (2003): "Second report on EU Clearing and Settlement Arrangements").

The first report identified 15 barriers (later known as the Giovannini barriers) that were preventing efficient cross-border clearing and settlement of securities in the EU. The list of barriers identified by the Group has been sub-divided under three main headings:
  • Barriers relating to national differences in technical requirements/market practice; this includes differences in how IT is implemented, restrictions to direct access to settlement systems by foreign institutions, different lengths of settlement cycles, and the requirement that issues in listed securities be deposited exclusively in the local settlement system.
  • Barriers relating to national differences in tax procedures; this includes transaction taxes in certain member states, exclusive rights to collection of withholding tax and inconsistent and complex taxation regulations in EU member states.
  • Barriers relating to issues of legal certainty; this includes the absence of an EU-wide framework for the treatment of interests in securities, and differences in legal definitions of, e.g. pledges, settlement finality and rights from securities.

The second report outlined measures to remove the Giovannini barriers, indicating institutions and organisations that would be responsible. These include the European Central Securities Depository Association (ECSDA), the European Central Bank (ECB), the Committee of European Securities Regulators (CESR), the Society for Worldwide Interbank Financial Telecommunication (SWIFT), as well as national governments. The report highlighted the importance of close co-operation between capital market institutions and national and regulatory bodies.
Last modified:26-02-2013 Go up