The race for European financial unity: Where is it going?

The financial world is indeed becoming a smaller place: just look at the flurry of merger activity that stock exchanges around the world have undergone in recent times. On the back of cross-border deals such as those between the New York Stock Exchange (NYSE) and Euronext, and the London Stock Exchange (LSE) and Borsa Italiana, what implications will there be for the capital markets at large?With the growth of globalisation, financial professionals can only expect greater complexities and more competition through innovation in the years ahead. Managing risks and costs in an increasingly cross-border environment is pivotal, particularly as more and more investors are looking beyond their own markets for opportunity. But much still remains to be done to create a more unified, risk-averse and cost-efficient post-trade environment for a growing pan-European and global financial marketplace.This paper examines the ongoing initiatives to create a more unified single capital market for Europe. Covering the efforts made by the Euroclear group to reduce average cross-border settlement fees from between €5 and €15 to less than €1, it also focuses on the wider Giovannini Group agenda and how its identified 15 barriers are facing removal. Furthermore, it looks at how self-regulatory measures such as McCreevy's Code of Conduct are helping the cause. Finally, it examines the potential ramifications of the European Central Bank's proposed securities settlement solution for the eurozone — Target2-Securities (T2S).