The ECB sees that it would be a great advantage for the European securities industry as a whole, in terms of cost-efficiency, if every investment firm could access that single central database. Every firm would be able to have the same information about instruments from this "golden copy", so there would be fewer errors in everyone's settlement process and fewer failed trades, which would reduce the cost of settlement to investment firms.

One of the first market reactions to this proposal has been "Who will fund the development?" The answer is that the ECB needs this database of instruments for its own internal use, so it has to pay to develop it in any case. "Why would investment firms change their processes to use an ECB database?" is another reaction. One simple answer is that investments firms would not have the cost and complexity of having each to maintain their own database, or the cost of paying a commercial data provider to do this.

One clinching argument is that the ECB could say that firms could only lodge instruments with the ECB as collateral if those instruments are identified in the ECB's database. That would provide a solid justification for ongoing maintenance of the database and another reason for firms to use it.

Look out for opportunities to see an ECB presentation on this topic in your area!