Transcript FundSettle

How Euroclear manages the
interoperability with the
different markets
Agenda



The Euroclear group
Creating a “European Domestic Market”, an exemple of
cooperation and consolidation among the CSD’s of the
Euroclear group
Euroclear Bank’s links with the different markets
Euroclear Group structure
As of Jan 2005
219 User Shareholders
Euroclear Plc
Euroclear SA/NV
Euroclear
Nederland
Euroclear
France SA
CRESTCo Ltd
Sicovam Holding
Amsterdam branch
Paris branch
London branch
Euroclear
Bank SA/NV
Turnover
Q2 2005
350
307.1
300
241.9
250
85.4
200
256.2
114.4
85.5
171.4
150
53
52.6
60.1
100
103.5
50
118.1
132.6
61
36.3
74.1
0
2002
CRESTCo
2003
Euroclear France
2004
2005
6 months
€ trillion
Euroclear Bank
ST005
Value of securities held
Q2 2005
14.6
14
12
13.1
10.9
0.7
10
11.9
0.8
0.7
3.2
6
3
2.6
2.4
4.1
2.2
8
0.8
3.8
3.5
6.7
4
2
4.8
5.9
5.3
0
2002
2003
2004
2005
€ trillion
30 June
Euroclear Nederland
Euroclear France
CRESTCo
Euroclear Bank
ST006
Agenda



The Euroclear group
Creating a “European Domestic Market”, an exemple of
cooperation and consolidation among the CSD’s of the
Euroclear group
Euroclear Bank’s links with the different markets
European capital markets infrastructure
The problem of fragmentation

Settlement is a key component of capital markets efficiency
– National markets not a European market
– At least one CSD per country
– fragmentation has a major impact on efficiency, cost and risk

Both Harmonisation and Consolidation enable efficiency gains,
and reduction of costs and risks
Consolidation of settlement is necessary to make
European capital markets competitive
for issuers and investors
Our vision is full consolidation of markets within
Euroclear Group
Customer
Agent
Common User Interface
CREST
Central
Banks
Euroclear
France
Euroclear
Netherlands
Domestic Service
CIK
Euroclear
Bank
Full Service
&
Full integration of legacy systems and functionality
Payment
systems
Single Settlement Engine
From today’s fragmentation towards consolidation
Current situation
CIK
E NL E F CREST E B
Step 2 ESES (2007)
Step 1 SSE (2006)
CIK
E NL E F CREST E B
CIK
E NL
EF
ESES-CCI – e-RGV - E2A
ESES - RGV upgrade
ESES - SP component
SSE
Step 3 Single Platform
(in phases from 2008)
Legend
Client Communication Interface
Positioning & booking
Core Processing
SSE
CIK
E NL
EF
CCI
Single Application
Platform
Legacy
Legal record
Country boundary
CREST E B
SSE
CREST E B
Conclusion
Euroclear’s business model meets the
challenges facing the European markets

Creating efficiency (e.g. reduce costs) and reduce risks while retaining
choice and competition

Eliminating differences in technology – both standards and processes

Harmonising market practices and legal/regulatory framework

Offering a settlement model that allows choice of service levels to meet
the needs of all issuers investors, and intermediaries
Agenda



The Euroclear group
Creating a “European Domestic Market”, an exemple of
cooperation and consolidation among the CSD’s of the
Euroclear group
Euroclear Bank’s links with the different markets
Euroclear Bank’s services
Money
Transfer
Settlement
services
Custody
services
Credit and Banking Services
Tri-Party
services
Lending
&
Borrowing
FundSettle
GE014B
Domestic debt
Austria
Luxembourg
Belgium
the
Netherlands
Australia
Denmark
Norway
Hong Kong
Argentina
Finland
Portugal
Indonesia
Canada
France
Russia
Japan
Mexico
Germany
South Africa
Malaysia
Greece
Spain
New Zealand
Ireland
Sweden
the
Philippines
Italy
Switzerland
Singapore
the United
Kingdom
Thailand
USA
Against payment
Free of payment
CS205
Equities
Austria
Luxembourg
Belgium
the
Netherlands
Denmark
the United
Kingdom
Argentina
Finland
Norway
Hong Kong
Canada
France
Portugal
Japan
Mexico
Germany
Spain
Malaysia
USA
Greece
Sweden
Singapore
Ireland
Switzerland
Italy
SE Settlement
CS206
Activity breakdown by market segment
“No client sector stands by itself”
26 %
8%
Broker/dealers
Borrowers
Seller
Fixed income
52 %
Equities
Derivatives
4%
Other participants
10 %
Lenders
Purchaser
Accessing new markets
1.
Issuance of eurobonds
-> acceptance of denomination currency
-> acceptance of settlement currency
SETTLEMENT CURRENCIES IN EB
CURRENCY
DENOMINATION CURRENCIES IN EB
ISO CODE
CURRENCY
ISO CODE
ARGENTINE PESO
ARS
UAE DIRHAM
AUSTRALIAN DOLLAR
AUD
BULGARIAN LEV (replaced by BGN)
BGL
CANADIAN DOLLAR
CAD
BULGARIAN NEW LEV
BGN
SWISS FRANC
CHF
BAHRAINI DINAR
BHD
CZECH KORUNA
CZK
BERMUDIAN DOLLAR
BMD
DANISH KRONA
DKK
BRAZILIAN REAL
BRL
ESTONIAN KROON
EEK
BOTSWANA PULA
BWP
EURO
EUR
CHILEAN PESO
CLP
BRITISH POUND
GBP
CHINESE YUAN RENMINBI
CNY
HONG KONG DOLLAR
HKD
COLOMBIAN PESO
COP
HUNGARIAN FORINT
HUF
CYPRUS POUND
CYP
CROATIAN KUNA
HRK
EGYPTIAN POUND
EGP
INDONESIAN RUPIAH
IDR
INDIAN RUPEE
INR
ISRAELI NEW SHEKEL
ILS
KAZAKSTAN TENGE (10/10/2005)
KZT
ICELANDIC KRONA
ISK
KOREAN WON
KRW
JAPANESE YEN
JPY
LEBANESE POUND
KUWAITI DINAR
KWD
MOROCCAN DIRHAM
AED
LBP
MAD
LITHUANIAN LITAS
LTL
MALTESE LIRA
MTL
LATVIAN LATS
LVL
MADEDONIA DENAR (10/10/2005)
MKD
NIO
MEXICAN NUEVO PESO
MXN
NICARAGUAN CORDOBA
MALAYSIAN RINGGIT
MYR
PERUVIAN NUEVO SOL
PEN
NORWEGIAN KRONA
NOK
ROMANIAN LEU (will cease to exist end Dec '06)
ROL
NEW ZEALAND DOLLAR
NZD
RUSSIAN RUBLE (replaced by RUB)
RUR
PHILIPPINE PESO
PHP
RUSSIAN RUBLE (RUB=RUR/1000)
RUB
POLISH ZLOTY
PLN
SAUDI RIYAL
SAR
ROMANIAN NEW LEU
RON
TURKISH LIRA (will cease to exist end Dec '05)
SWEDISH KRONA
SEK
TAIWAN DOLLAR
TWD
SINGAPORE DOLLAR
SGD
UKRANIAN HRYVNIA
UAH
SLOVAK KORUNA
SKK
URUGUAYAN PESO
UYU
SLOVENIAN TOLAR
SIT
VENEZUELIAN BOLIVAR
VEB
THAI BAHT
THB
VANUATU VATU
VUV
TURKISH NEW LIRA (TURKISH LIRA as of 01/01/06)
TRY
CFA FRANC BEAC (Cameroon)
XAF
UNITED STATES DOLLAR
USD
GOLD
XAU
SOUTH AFRICAN RAND
ZAR
SDR INTERNATIONAL MONETRARY FUND
XDR
Last update: 23 August 2005
TRL
CFA FRANC BCEAO (Sénégal, Côte D'ivoire)
XOF
ZAMBIAN KWACHA
ZMK
2. Access to the national domestic securities markets
Major determining factors guiding the decision to
service a market
International flows
Operational Risk
Reputation Risk
Liquidity Risk
Legal Risk

Sufficient international demand from international
investors justifying a link

Operational procedure

Service level agreements

Contractual relationship external agents

Choice of agents – depositories
(settlement + payments, asset servicing)


Free access to the currency
Credit Lines with cash correspondents (settlements +
payments)

Asset protection

Enforceability of contracts