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Brussels, 16 July 2009

Financial services: Commission publishes study on trading and post-trading prices, costs and volumes

(see MEMO/09/336 )

The European Commission has today published a first study on the prices, costs and volumes for trading and post-trading of securities in the EU, carried out by Oxera Consulting Ltd. This study, which will be renewed, allows the Commission to monitor how prices and costs evolve. In this way, the Commission will be able to better evaluate the effect of its policies in this area and to base future policies on solid evidence.

Internal Market and Services Commissioner Charlie McCreevy said " This study is significant because it helps us understand the evolution of end-to-end trading and post-trading prices, costs and volumes. While acknowledging the broad diversity in the financial centres covered, I particularly welcome the study's findings concerning the decreases in costs for trading and clearing and to some extent also for settlement services since 2006. This confirms the positive impact on competition of the Markets in Financial Instruments Directive and the Code of Conduct on clearing and settlement. I encourage market participants to continue supporting our efforts to improve transparency and carry out sound policies based on facts."

This study contains data from the full securities trading and post-trading value chain for 2006 (as well as 2008 for trading venues, Central Counterparty clearing houses (CCPs) and Central Securities Depositories (CSDs)). It accordingly provides a detailed understanding of end-to-end trading and post-trading prices and costs in a number of European financial centres.

The study's findings are built on data provided by intermediaries (fund managers, brokers and custodian banks) and providers of infrastructure services (trading venues, central counterparty clearing houses and central securities depositories). The study is accordingly important for intermediaries and infrastructures as well , as illustrated by the reactions to the report set out in the annex below.

Main findings

The purpose is not to compare financial centres, but to see how prices, costs and volumes in a given centre evolve over time. Building on the diverse picture of the financial centres covered in this study, the following general findings can be made:

  • Volume determines prices: As regards the data from the full value chain covering 2006, which will form the base for future monitoring, evidence from throughout the value chain highlights that volume is the single most important determinant of unit price. While there is significant cross-border activity, domestic activity is much larger. For example, while most infrastructures have many clients from abroad, these stand for much less volume than domestic clients. Therefore, throughout the value chain, the costs of trade and post-trade services are higher for cross-border transactions than domestic ones. Different potential to exploit scale economies explain much of the difference, but barriers (e.g. of Giovannini kind) certainly play a role as well.

  • Cost s are decreasing: As regards the data from providers of infrastructure services, which covers both 2006 and 2008, building on the diverse picture of infrastructures in 18 financial centres, the following general observations can be made. First, across financial centres, trading costs in terms of costs per transaction have decreased significantly since 2006. Second, CCP clearing cost per transaction has decreased significantly since 2006. The picture is more diverse for CSDs. In some centres, costs have decreased while in other centres they have increased. Overall, these general trends documented by the study confirm the anecdotal evidence documented in the Commission services reports to the ECOFIN since the entry into force of the Code of Conduct.


This study is the result of the first data collection exercise. It collect s data for 2006, thereby establishing the baseline against which future prices, costs and volumes will be compared. In addition, the study also contains data for 2008 as regards providers of infrastructure services (exchanges, CCPs and CSDs). This study accordingly establishes the baseline as well as providing a first illustration of how certain trade and post-trade prices have evolved.

More information is available at:


Wider reactions

Frank Gerstenschläger, Member of the Deutsche Boerse Group Executive Committee and Vice President of the Federation of European Securities Exchanges: " We welcome the approach of the Commission to conduct comprehensive market analysis such as the Oxera study and therefore we actively participated in it. In particular, we welcome that the study focuses on transaction costs along the entire value chain including both market infrastructures and intermediaries. By showing a decrease in costs for customers of trading platforms, CCPs, and CSDs in most markets, the study demonstrates the efficiency of market infrastructures. We look forward to future developments of the study based on the baseline now established. "

Robert Barnes, Managing Director of equities at UBS Investment Bank, said " This first report by Oxera on behalf of the European Commission benchmarking the impact of tariff prices on cost and activity of trading and post-trading services provides insights into the difficulty and frictional cost users face and seek to overcome for pan-European equities business. This is an important exercise, UBS welcomes the Commission's efforts to improve efficiency of European securities markets and commends the Commission for its commitment to evidence-based policymaking. To become an effective tool, further reports need to reflect also post-trade costs as a proportion of the respective value-traded – as this is what impacts investors."

Dr Luis Correia da Silva, Man aging Director of Oxera, said, " This study provides the first detailed empirical description of how the European capital markets are operating in terms of market dynamics and customer and supplier behaviour. It shows that integration of markets is well under way but there is some further work to be done. The costs of cross-border transactions are still between two and six times more expensive than domestic transactions. At the same time, our analysis shows that using infrastructure providers has become cheaper, by up to 80% over two years. This reflects some significant price reductions and is what one would expect as competition increases. The next Oxera study will assess more precisely the extent to which these price reductions have translated into lower trading and post-trading costs for institutional and retail investors. "

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