Download - ACSDA Seminar, Lima, November 14-15, 2002
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ACSDA Seminar, Lima, November 14-15, 2002
“Trends and Drivers of Financial Services And Their Impact on CSD Services”
Giovanni Sabatini, Chairman of ECSDA and CEO of Monte Titoli
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2Marzo 2002
Agenda
1. ECSDA- Brief overview
2. Trends and drivers of C&S
3. Impacts on CSD Services
4. Europe: A lab for studying new challenges
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3Marzo 2002
1. ECSDA – brief overview
ECSDA (European Central Securities Depositories
Association) was founded in 1997
Present Steering Committee:
Chairman: Giovanni Sabatini, Monte Titoli
Vice-Chairman: Joel Mérère, Euroclear France
Secretary: Jan Hellstrom, VPS
Treasurer: Stéphane Bérnard, CIK
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4Marzo 2002
1. ECSDA - brief overview
CSD SA: Greece Euroclear CIK: Belgium CrestCo: GB Clearstream: Germany Euroclear France HEX: Finland Euroclear Netherlands Interbolsa: Portugal Iberclear: Spain VPS: Norway Monte Titoli: Italy OEKB: Austria SIS: Switzerland VP: Denmark VPC: Sweden
Members
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5Marzo 2002
1. ECSDA - brief overview
Drawing up technical standards for cross-border settlement
(interoperability and risk minimisation)
Representing a forum for exchanging common views and
carrying out projects of mutual interests
Adopting initiatives towards European Authorities
Offering advise for legal, regulatory and fiscal matters:
contribution to the decision making process shaping the
future of European C&S
ECSDA’s tasks
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6Marzo 2002
Agenda
1. ECSDA- Brief overview
3. Impacts on CSD Services
4. Europe: A lab for studying new challenges
2. Trends and drivers of C&S
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7Marzo 2002
2. Trends and Drivers of C&S
Globalisation 1
Technology3
Deregulation – Re regulation2
Blurring of specialisation 4
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8Marzo 2002
Agenda
1. ECSDA- Brief overview
2. Trends and drivers of C&S
4. Europe: A lab for studying new challenges
3. Impacts on CSD Services
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9Marzo 2002
3. Impacts on CSD services
Globalisation: increases cross-border activity1
Source: US Treasury
Investors going global at rapid rates
12,8 12,814,6
16,9
4,27,2
0,9 2,6
22,920,0
5,15,15,54,0 3,94,5
0
5
10
15
20
25
90 95 97 98 99 00 01 02Year
$ T
rill
ion
s
US Gross acitivity in foreign securities, Sales/ PurchasesForeign gross activities in US securities, “
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10Marzo 2002
3. Impacts on CSD services
Globalisation1
Requires CSDs to serve new markets
Requires CSDs to offer new products/ services
Demands CSDs to reduce costs of cross border settlement and increase efficiency
IMP
AC
TS
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11Marzo 2002
3. Impacts on CSD services
Deregulation – Re regulation2
Demutualisation of stock exchanges and of post-trading services providers
Higher attention paid by both European and non-European regulators (CPSS-IOSCO recommendation N°18)
Consolidation process (both vertical and horizontal)
IMP
AC
TS
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12Marzo 2002
3. Impacts on CSD services
Technology3
Provide remote access
Offer a single access point for clients operating both on domestic and foreign markets
IMP
AC
TS Offer realtime access
Use new technologies
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13Marzo 2002
3. Impacts on CSD services
Blurring of specialisation4
Change of traditional roles of (I)CSDs, custodians, clearing houses
Increasing competition among market operators
Broadening of product ranges
Need to focus on risk management/transparency of risks
IMP
AC
TS
Interaction with CCPs
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14Marzo 2002
3. Impacts on CSD services
Focus: The interaction between (I)CSDs and custodians
4
(I)CSDs are expanding to low added value level services
Their added value services are aimed at increasing the efficiency of the settlement process
Competition between (I)CSDs and custodians might exist for low added value services
Custodians offer services at the highest added value level
Cooperation is essential because custodians’ services are complementary to the CSDs’ ones
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15Marzo 2002
3. Impacts on CSD services
Focus: The interaction between (I)CSDs and CCPs
4
Advantages of the CCP More efficient risk management Anonymity of counterparties Netting
Is it always necessary?
CPSS-IOSCO recommendation N° 4: the benefits and costs of a CCP should be assessed
Capability of SSSs to interact with whichever market operator (trading platforms, CCPs, intermediaries, matching and routing engines)
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16Marzo 2002
Agenda
1. ECSDA- Brief overview
2. Trends and drivers of C&S
3. Impacts on CSD Services
4. Europe: A lab for studying new challenges
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17Marzo 2002
4.1 The European financial integration
The two pillars of the integration
2001: Introduction of the Euro
1999: Adoption of the Financial Services Action Plan (FSAP)
The two pillars of the integration
2001: Introduction of the Euro
1999: Adoption of the Financial Services Action Plan (FSAP)
Strategic objectives to reap the full benefits of the Euro and to ensure continued stability and competitiveness of EU financial markets:
N° 1: A single EU wholesale market
N° 2: Open and secure retail markets
N° 3: State-of-the-art prudential rules and supervision
General Objective: wider conditions for an optimal single financial market
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18Marzo 2002
4.2 Present difficulties
Technical barriers and market practice Barriers of high importance
National restrictions and practical impediments to remote access
Differences in national rules relating to corporate actions, beneficial ownership and custody
Barriers of medium importance
Absence of intra-day settlement finality
National differences in settlement periods
Tax barriers: Stamp duty in UK, withholding tax in Italy
Legal barriers: Companies law, bankruptcy law
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19Marzo 2002
4.3 Progress already made
Starting point: A fragmented environment: “Fragmentation in the EU clearing and settlement infrastructure complicates significantly the post-trade processing of cross-border securities transactions relative to domestic transactions" (Giovannini Report)
Starting point: A fragmented environment: “Fragmentation in the EU clearing and settlement infrastructure complicates significantly the post-trade processing of cross-border securities transactions relative to domestic transactions" (Giovannini Report)
Harmonisation process started: Investment Service Directive (ISD) 1993
Adoption of new directives: Settlement Finality Directive, Collateral Directive, 6 other legislative proposals and the updated ISD (to be approved within the end of 2002)
Comitology procedure: making financial services legislation more timely and flexible
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20Marzo 2002
4.3 Progress already made
Starting Point: Technical/Market practice: “The EU clearing and settlement landscape could be significantly improved by market-led convergence in technical requirements/market practice across national” (Giovannini Report)
Starting Point: Technical/Market practice: “The EU clearing and settlement landscape could be significantly improved by market-led convergence in technical requirements/market practice across national” (Giovannini Report)
ECSDA WG 4: Technical specifications of minimum standards and messages (SWIFT ISO 15022)
ECSDA WG 2: Model agreement ECSDA WG 3: ECSDA model for settling cross border
transactions ECSDA WG 5: Standardisation of corporate actions and events
processing Forthcoming Report 2 of the Giovannini Group
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21Marzo 2002
4.4 The way ahead: false issues
1. C&S as a natural monopoly
2. Consolidation versus integration
3. Religious war: verticalists versus horizontalists
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22Marzo 2002
4.4 The way ahead: real issues
Significant reduction in cross-border investment/
running costs
Risk reduction
Efficiency
Reliability, resilience, integrity and scalability
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23Marzo 2002
4.5 Steps for further rationalisation
1. What market participants need:
2. How to be achieved:
InteroperabilityInteroperabilityA
B Effective Level Playing Field
A single integrated “process” for European C&S rather than legal consolidation
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24Marzo 2002
4.5 Steps for further rationalisation
A Interoperability
Capability of systems to interoperate with each other (e.g. also with payment systems)
Open architecture of clearing/ settlement systems
Minimisation of sunk costs for intermediaries
Independent from governance
Non preemptive with regard to a different long term solution
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25Marzo 2002
Interoperability: Network industries
A good example is the telecommunication industry where different actors interact as a single integrated process without requiring consolidation
4.5 Steps for further rationalisation
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26Marzo 2002
4.5 Steps for further rationalisation
Clarification of the rights of access to/choice of C&S facilities(EU Commission)
Clarification of the rights of access to/choice of C&S facilities(EU Commission)
1
New ISD proposalNew ISD proposal
Overcoming the main legal and fiscal obstacles (Giovannini report)
Adoption of the “functional” approach
Overcoming the main legal and fiscal obstacles (Giovannini report)
Adoption of the “functional” approach
2
A directive on C&S ?A directive on C&S ?
Guaranteeing full transparency Guaranteeing full transparency
CPSS- IOSCO disclosure framework
CPSS- IOSCO disclosure framework
Common regulatory approach/ minimum standardsCommon regulatory approach/ minimum standards
3ECB/CESR standardsECB/CESR standards
Effective Level Playing FieldB
4
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27Marzo 2002
4.5 Steps for further rationalisation
Avoiding over-regulation: flexible regulatory framework
Promoting a clear, unambiguous legislative framework
(minimise conflicts of laws/ ensure level playing field)
Ensuring transparency of risks
Favouring continuous dialogue between
European Authorities and market participants
A directive on C&S?
Source: Comments of the ECSDA regarding the Communication from the EU Commission, September 2002
Yes, but in line with the aim of:
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28Marzo 2002
5. ECSDA Contacts
Giovanni Sabatini (Monte Titoli, Italy): [email protected]
Joel Mérère (Euroclear Fra.): [email protected]
Jan Hellstrom (VPS, Sweden): [email protected]
Stéphane Bernard (CIK, Belgium): [email protected]
ECSDA Website: http://www.ecsda.com
For further information, please contact:
or visit the: