Transcript Euroclear Interconnecting the CSD

External Use
Euroclear
Interconnecting
the CSD
Presentation at AMEDA
Marrakech, 21 October 2009
By Bernard Ferran
Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
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Euroclear group
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Ownership structure
201 user
shareholders
Euroclear
plc
Sicovam Holding
Euroclear
SA/NV
Euroclear
Bank
Euroclear
Belgium
Euroclear
France
Euroclear
Finland *
Euroclear
Nederland
Euroclear
UK & Ireland
Euroclear
Sweden *
3
* NCSD Holding
Euroclear group
Key Figures
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Euroclear group
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In the world…
Euroclear Finland
Helsinki, Finland
Representative
office
New York, USA
EMXCo
Hertfordshire, United Kingdom
Euroclear UK & Ireland
Xtrakter
London, United Kingdom
Euroclear Sweden
Stockholm, Sweden
Representative office
Frankfurt, Germany
Euroclear Nederland
Amsterdam, The Netherlands
Representative office
Tokyo, Japan
Representative office
Beijing, China
Euroclear Bank
Euroclear Belgium
Brussels, Belgium
Euroclear Bank Branch
Hong Kong, China
Euroclear France
Paris, France
Representative office
Singapore, Singapore
Euroclear serves clients in their own language across time zones
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Euroclear Group
Reduces overall cost and risk for the market
Industry with large economies
of scale
Unit Costs
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Risks mitigation through
- Harmonisation
- Automation
− Standardisation
− Central
Counter-Party
Risk
Scale
STP
Euroclear is an infrastructure services provider for commoditised post-trading services,
aiming proactively at facilitating trading and post-trading in particular by way of risk
and cost reductions in the market, including through cost efficiency measures and
consolidation
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Euroclear Group
Today
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• 869 European Participants
• 576 non-European Participants
• More than 50% of foreign holdings
in European Government bonds
• 22 European markets
• 18 non-European markets
• More than 60% of total German
bond settlement
• More than 400,000 bonds,
equities and funds
• Approximately EUR 250 bn cross-market,
cross-instrument triparty collateral
• Close to 85% turnover market
share vis-à-vis Clearstream
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ST008
Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
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Focus on Euroclear Bank
Features

User-governed

Belgian incorporated bank

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Supervised by:
– Belgian Banking and Finance Commission (“CBFA”)
– National Bank of Belgium

EUR 2 billion of total shareholder’s equity
– 4 times the BIS regulatory capital requirement
– Strong financial ratios

Superior credit rating : AA+ (S&P, Fitch)
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Focus on Euroclear Bank
External Use
Total: 1332 clients
Japan
5.2%
Asia
13.6%
Africa
0.9%
Middle East
4%
North America
11.4%
Latin America
4.8%
Europe
44.2%
UK
15.9%
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ST009
Focus on Euroclear Bank
Full services offered
Settlement
The Euroclear group is the world's
largest provider of domestic and
cross-border settlement and
related services for bond, equity
and fund transactions. Settlement
is both a core service and a core
strength of the group
Asset Servicing
Asset servicing is the family of
services comprising all custody,
new issues and issuer services
provided by the Euroclear (I)CSDs.
Asset servicing is a core activity of
the group at an equal level with
settlement
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Asset Optimisation
Asset optimisation is the family of
Euroclear services assisting clients
to optimise their asset usage,
primarily in view of optimising the
settlement process but also in the
form of, for example, triparty
operations
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Focus on Euroclear Bank
Your direct access to markets

External Use
40 major debt markets
Argentina, Australia, Austria, Belgium, Canada, Czech Republic,
Denmark, Nasdaq Dubai, Finland, France, Germany, Greece,
Hungary, Hong Kong, Indonesia, Ireland, Israel, Italy, Japan, Korea,
Luxembourg, Malaysia, Mexico, The Netherlands, The Philippines, New
Zealand, Norway, Portugal, Romania,
Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden,
Switzerland, Thailand, U.K., U.S.

30 major equity markets
Argentina, Austria, Belgium, Canada, Czech Republic, Denmark,
Finland, France, Germany, Greece, Hungary, Hong Kong, Ireland,
Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Nasdaq Dubai, The
Netherlands, Norway, Portugal, Singapore, Slovakia, Spain, Sweden,
Switzerland, U.K., U.S.

40,000 mutual and hedge funds
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Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
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Domestic Market for Europe
European trading, clearing and settlement
still very fragmented
Sweden
Finland
Trading
OMX
Clearing
OMX
Clearing
(derivatives
only)
CSD
France
Belgium
Netherlands
EURONEXT
LCH CLEARNET
Euroclear Group
User-Owned
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UK
Italy
Germany
Spain
Switzerland
Norway
LSE
BORSA
DBAG
BME
SWX
OLSO
BORS
NOS
(derivative
s only)
VPS (Olso
Bors)
CCG
EUREX
MEFF CLEAR
X-CLEAR
(SIS)
M.T.
CBF
IBERCLEAR
SIS (SEGA
INTERSETTLE)
Link-Up Markets
(+ Denmark, Austria and Greece/Cyprus)
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Domestic Market for Europe
The answer of Euroclear Group
Transforming
cross-border
settlement into
‘internal book-entry
settlement’
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Systems
consolidation
Creating a
single
platform for
panEuropean
settlement
Delivering
a
domestic
market for
Europe
Consolidating
multi-market
settlement
and custody
Harmonisation
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Domestic Market for Europe
The implementation of the Single Platform
is progressing well
SSE
ESES
• Single Settlement Engine with technical netting
• Common Communication Infrastructure providing a
SPC
SPCM
SPTM
73%
19%


single entry point with ISO SMPG compliant messaging
and harmonised user screens
• Common Custody Platform with timely and accurate

information on corporate actions, real-time credit of
income proceeds, and consolidated reporting
• Harmonised lifecycle management to allow

internalisation of settlement across group markets
• Group collateral management with single pool
• Central bank money settlement with demand driven


auto-collateralisation
• Further service enhancements and standardisation
across custody and settlement services
Completion rate
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100%
100%
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Domestic Market for Europe
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Delivering the building blocks of single platform...
Communication
Infrastructure
Collateral
Management
Service
Enhancements
Benefits of full Single
Platform
Group account structure

ISO messages

Pooling of assets

Transaction
management

Harmonised user screens

Interoperability
between full/domestic

Matching at party level

Dual network providers

Access to central bank
liquidity

Improved
interoperability with
group markets
 Synchronous validation
 Harmonised validation
and matching
Dedicated Liquidity
Model

Harmonised settlement
instruction lifecycle
Internalisation of full &
domestic settlement
Group billing
Partialling and splitting
 Dedicated liquidity
 Demand-driven autocollateralisation
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Domestic Market for Europe
Timelines
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Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
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TARGET2 - Securities
Scope of proposal



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In July 2006, ECB announced that it was evaluating opportunities to
provide efficient settlement services for securities transactions in
central bank money on a single platform (TARGET2-Securities or
“T2S”)
In July 2008, ECB Governing Council decided to launch T2S (after
intense consultation period on business requirements)
T2S deals with settlement in central bank money only, no custody or
asset servicing, no issuer services, no settlement in commercial bank
money (these services remain with the (I)CSDs)

Open to euro and non-euro zone currencies

Implementation around 2013/2014
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TARGET2 - Securities
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What is it?


“ A technical platform to support CSDs in providing core,
borderless and central settlement services”
“ The objective is to achieve harmonised and commoditised DVP
settlement in central bank money in euros (and possibly other
currencies) in substantially all securities in Europe”

“Users need only open a single account with a single CSD to settle
any transactions in securities in T2S with any participant”

“ T2S … will be operated on the Target2’s cash platform to exploit
synergies with T2 to the fullest extent possible”
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ECB, December 2007
TARGET2 - Securities
Changes implied
External Use
T2S addresses settlement of Euro-zone securities
bringing the benefits of:
 Harmonisation of settlement
 Further interoperability between markets
 Pooling of liquidity via T2
But will require appropriate asset servicing solutions, coping with:
 split between asset servicing and settlement,
 lack of harmonisation of CA and tax which require market
proximity, links with local intermediaries
 remaining market specifics settlement features,
 credit and liquidity needs driven by an RTGS system
CSDs can offer a single access to T2S for settlement but lack appropriate and cost/risk
effective asset servicing capacity for foreign securities
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TARGET2 - Securities
Clients’ requirements


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Clients will reassess the way to access European markets
Choices will vary across client profiles, markets and product
segments and will be driven by:
–
–
–
–
–
–
Settlement efficiency
Liquidity
Cost
Deadlines
Required service level
Asset optimisation (credit, collateral and liquidity)
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TARGET2 - Securities
Euroclear to address different clients’ needs …
External Use
CCI
SERVICE

Asset holding

Settlement

Asset servicing



1. Full range of markets
and services
2. Single access to Eurozone securities
3.Single access to Eurozone securities
Euroclear Bank
4. Direct access to
Group markets
One of the CSD of Euroclear Group
Commercial Bank Money (CoBM)
CentraL bank Money (CeBM) on T2S
On Single Platform
On T2S
Enhanced
Enhanced
Enhanced
Commoditised
Collateral mgt and
collateral pooling




L&B



N/A
Single ISO compliant
access (CCI)




All
Euro-zone (T2S)
Euro-zone (T2S)
Group CSD securities
ELIGIBLE SECURITIES


KEY BENEFITS

Global coverage

Strong integration of
services

No migration impact
with T2S
Single access to T2S
settlement in CoBM
Direct settlement
feeds / primary
dealership

Single access to T2S
settlement in CeBM


Direct access
Harmonised CA
processes across
Group markets
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TARGET2 - Securities
... supported by Single Platform developments
CCI
A single access
SPC
Access to full range of asset servicing
SPCM
External Use
A single pool of collateral
SPTM
(Single Platform
Transaction
Management)
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Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
26
Link Up Markets
External Use
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Link Up Markets
Example
External Use
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Agenda

Presentation of Euroclear Group

Focus on Euroclear Bank

To deliver a Domestic Market for Europe

Target 2- Securities

Link Up Markets

Connecting the CSD to Euroclear Bank
External Use
29
Connecting the CSD to Euroclear Bank
Access to local markets
Clients
Clients
/ Investors
Global
custodians
Custodians
Clients
Clients
/ Investors
Global
custodians
Custodians
Clients
Clients
/ Investors
Global
custodians
Custodians
Local agent
Local agent
Partial or Full support
Local agent
CSD
CSD
External Use
CSD
CSD
CSD
Flexibility per market
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Connecting the CSD to Euroclear Bank
Access to local markets
ClientsClients
/ investors
ClientsClients
/ investors
CSD
CSD
Issuing
CSD CSD
External Use
CSD
CSD
Euroclear Bank
(single account)
40CSD
markets
Flexibility per market
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Connecting the CSD to Euroclear Bank
What can Euroclear Bank offer you ?

External Use
Full services
– Settlement (DvP or FoP), asset servicing, tax, collateral
management, Lending & Borrowing, Forex)

Link to 40 markets
– Direct to CSD or via local agents

Proven track records
– 19 CSD connected to us
Midclear, Takasbank, MCDR, Nasdaq Dubai, SD Indeval, Caja de Valores, Monte
Titoli, KPDW, Austraclear, NDC, LCSD, KSD, TDCC, Euroclear Belgium, Euroclear
France, Euroclear UK&Ireland, Euroclear Sweden, Euroclear Finland, Euroclear
Nederlands,
– More to join from Latin America, Middle East/Africa, CIS, South
Europe and Asia
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Connecting the CSD to Euroclear Bank
What can Euroclear Bank offer you ?

External Use
Example of full in-sourcing
– Euroclear Bank acts as the Irish CSD for bonds

Attractive Pricing for a full services
– Strong in Eurobonds, D.R., European Equities and all Fixed-income
markets, Mutual Funds
– Recognises the economy of scale

Partners of Euroclear Bank
– Smaller/some local clients are rerouted to their CSD which offer a
domestic & international services
– Training/education, advisory on how to best operate outside of
your home market
– Servicing the multi-listed purposes
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Connecting the CSD to Euroclear Bank
Why you should connect to Euroclear Bank ?




External Use
Expand your area of expertise by offering, both Domestic and
International
Diversify your source of revenues, maximise your existing
infrastructure
Take advantage of the Euroclear Bank’s 40 years of experience
Times are changing, you need to act now to seize the
opportunities
Thank you
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External Use