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The European Commission (EC) has won broad support for its plan to boost the pan-European financial market by adopting a law on clearing and settlement systems.
A majority of European Union (EU) regulators, banks, exchanges and other market participants consulted by the EC said they were in favour of such legislation. The London Stock Exchange, Euronext and the European Central Bank were among the supporters.
Their backing adds fresh impetus to the Commission's drive in this area, although the Brussels regulator said lately that it would not be "rushing into legislation".
Clearing and settlement ensure that an equities trade is paid for and delivered to a customer. Often described as the "plumbing" of financial markets, these services are crucial for the smooth functioning of markets.
Experts have long warned that the development of an integrated EU financial market is being held back by the fragmentation of clearing and settlement systems. It is, for example, costlier to settle a cross-border share transaction than a national one.
Despite the failings of the system, there remains disagreement over whether the remaining barriers should best be tackled through EU legislation or by dismantling the obstacles gradually.
A European Parliament report published last month warned that "embarking on legislation is likely to slow progress" in breaking down barriers.
Charlie McCreevy, the EU internal-market commissioner, promised recently that "any proposal will first be tested by a fully fledged, comprehensive impact assessment".
He added: "Any decision on the content, nature and scope of a directive will depend on the evidence produced by that assessment and on the extent to which rigorous analysis shows that measures envisaged will materially improve liquidity, reduce costs, and enhance safety in clearing and settlement."
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