The integration process underway in the EC capital markets is being driven fundamentally by the intensification of international competition. London has been the major beneficiary of the "internationalization" of European securities trading, although its dominant position will face increasing competition from alternative market structures and trading technologies, more efficient clearing and settlements systems, and effective strategic international alliances. The present EC legislative framework is not well suited to expediting the integration process, as it allows member state concerns with protecting domestic institutions and market structures consistently to dominate considerations of efficiency and stability in the wider European market. Having emerged from an intrinsically political process, the Investment Services Directive is perhaps best understood as a cease-fire agreement among member state governments, rather than as a coherent set of groundrules for effective international competition. The markets themselves, rather than the legislators, will continue to have the dominant influence over the shape of the European capital markets.