Deutsche Borse Rejects European Commission Concerns over Clearstream

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Byline: William Wright

Deutsche Borse has rejected the competition concerns raised by the European Commission over the activity of Clearstream Banking as part of the commission's wider investigation into clearing and settlement.In the preliminary findings of its two year investigation into the European clearing and settlement industry, the commission raised specific concerns about the behaviour of Clearstream Banking AG, a subsidiary of Clearstream International which is fully owned by Deutsche Borse. The early findings mark the first blood for Euroclear, Clearstream's arch-rival, which has long argued that Clearstream has discriminated against it.

The commission highlighted two main concerns. First, that Clearstream refused Euroclear Bank access to its settlement platform for German securities for more than two years, and second, that when it finally allowed access to Euroclear, it charged its rival more for that access than other customers. The commission's concerns relate to a period of several years leading up to January 2002.

In each case, the commission's concern relate to Clearstream's treatment of Euroclear as one of its customers, while the two businesses are direct rivals in international clearing and settlement. The commission said: "Clearstream's behaviour had the effect of limiting cross-border trade in such securities, while Clearstream was at the same time establishing a competing cross-border operation."

The commission's preliminary findings will trigger what is called the infringement procedure, and Clearstream now has the opportunity to defend itself with a formal reply in the next two months. Deutsche Borse, which bought the remaining stake in Clearstream that it did not already own last year, said it did not accept the commission's findings. "We believe that the reproaches are unwarranted and that all of the issues raised in the statement relate to past activity," it said.

Euroclear, Clearstream's arch-rival, declined to comment on the statement by the European Commission, other than to say it supported free and open competition, and that the issues raised were a matter between the commission and Clearstream. …