The European Commission’s legal certainty group (LGC) has issued a set of recommendations designed to help improve and harmonize post-trade securities processing across the European Union.

Among the suggestions is a call to allow corporate issuers to choose a central securities depository (CSD), rather than having to use their home-country depository.

“Such a freedom of choice would considerably enhance competition and the possibility to consolidate amongst post-trading infrastructures,” said the EC in an Aug. 22 statement.

The LGC’s recommendations build upon the commission’s voluntary code of conduct, issued in 2006, which requires that market infrastructures offer reciprocal open access.

“Legal barriers make it much more complex to hold securities cross-border and lead to higher costs for transactions and credit,” said European Union internal market commissioner Charlie McCreevy, who initiated the code. “In addition, they cause difficulties and uncertainty among investors when exercising their rights in corporate actions abroad. The legal certainty group’s work will help us to bring down these barriers.”

As cross-border trading continues to pick up, European regulators and industry participants have focused attention on the continent’s fragmented clearing and settlement systems, which add to the expense and complexity of processing a transaction.

In 2003, the EC-sponsored Giovannini Group released a set of 15 barriers to a unified clearing and settlement infrastructure, highlighting issuers’ inability to select which depository processes their securities.

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