Rapporteur: Multi-tiered custody of securities provides cost savings and promotes developments in the securities markets
Professor Eva Liljeblom's report indicates that the direct and indirect impacts of an expansion of multi-tiered custody of securities are on the whole distinctly positive. Rapporteur Liljeblom handed her report on the economic impacts of multi-tiered custody to Mari Kiviniemi, Minister of Public Administration and Local Government, on 3 June 2010.
The report complements the work of the working party for overhauling securities market legislation set up by the Ministry of Finance in February 2009. The report examines the economic impacts of an expansion of multi-tiered custody of securities and nominee registration and its impact on the functioning of the Finnish capital markets, ways to bolster competitiveness and diversify the supply of financing. The effects are reviewed from the viewpoint of the markets, the authorities and the society.
Professor Liljeblom's study indicates that multi-tiered custody of securities would make it more cost-efficient and effective for Finnish investors to invest and trade in shares of Finnish companies, as the expenses for settlement of securities transactions would be lower. The registration costs of listed companies in the book-entry system could lower if multi-tiered custody of securities were to be expanded.
The report suggests that multi-tiered custody would increase the supply of custodian services and improve the functioning of such services internationally. Lower costs in securities settlement would promote trading in shares, which in turn might strengthen the valuation of shares on the securities markets. In terms of the national economy, broader multi-tiered custody would reduce the capital costs of listed companies, bringing a positive boost to investment, employment and GDP.
Multi-tiered custody would affect information disclosure to tax authorities in particular, as the book-entry system and intermediaries' reports would not provide information on all Finnish owners. The authorities' access to information would have to be enhanced in the multi-tiered system.
The rapporteur presents other aspects deemed important to promote efficient trading and listing opportunities for Finnish SMEs' securities. The report indicates that listing is currently topical for few companies, and companies tend to have flawed views of listing. As a general observation, the rapporteur believes that the relevance of the capital markets in economic developments is not fully recognised.
Inquiries:
Professor Eva Liljeblom, tel. 358 40 352 1291 and
Ms Tuija Taos, Head of Department, Deputy Director General, tel. 358 9 160 33095