how euroclear manages the interoperability with the different markets
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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. - PowerPoint PPT PresentationTRANSCRIPT
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 Sicovam Holding
Euroclear SA/NVAmsterdam branch
Paris branchLondon branch
Euroclear Nederland
Euroclear France SA
CRESTCo LtdEuroclear
Bank SA/NV
Q2 2005Turnover
Euroclear BankCRESTCo Euroclear France
ST005
€ trillion
0
50
100
200
250
350
150
300
6 months2002
241.9
2003
256.2
2004
307.1
2005
171.4
61
36.3
74.1
85.4
53
103.5
85.5
52.6
118.1
114.4
60.1
132.6
Value of securities held
Euroclear BankCRESTCo
Euroclear FranceEuroclear Nederland
ST006
Q2 2005
14.6
€ trillion
0
2
4
6
8
10
12
14
30 June
2002 2003 2004
10.911.9
13.1
2005
0.7
2.2
3.2
4.8
0.7
2.4
3.5
5.35.9
3.8
4.1
2.6
30.8
0.8
6.7
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
Consolidation of settlement is necessary to make European capital markets competitive
for issuers and investors
European capital markets infrastructureThe 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
Our vision is full consolidation of markets within Euroclear Group
Full integration of legacy systems and functionalityFull integration of legacy systems and functionality
Single Settlement EngineSingle Settlement Engine
Common User InterfaceCommon User Interface
CRESTCREST EuroclearFrance
EuroclearFrance
EuroclearNetherlands
EuroclearNetherlands CIKCIK Euroclear
Bank
EuroclearBank
Customer
Domestic ServiceDomestic Service Full ServiceFull Service
Agent
Central Banks
&
Payment systems
From today’s fragmentation towards consolidation
CIK E NL E F CREST E B
Current situation
Positioning & booking
Legal record
Core Processing
Client Communication Interface
Legacy
Country boundary
Step 1 SSE (2006)
CIK E NL E F CREST E B
SSE
ESES-CCI – e-RGV - E2A
ESES - SP component
ESES - RGV upgrade
SSE
CIK E NL E F CREST E B
Step 2 ESES (2007)
Step 3 Single Platform
(in phases from 2008)
SSE
CIK E NL E F CREST E B
CCI
Single ApplicationPlatform
Legend
ConclusionEuroclear’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
GE014B
Euroclear Bank’s services
Money Transfer
Settlement
services
Custodyservices
Credit and Banking Services
Tri-Party
services
Lending &
Borrowing
FundSettle
Com
mu
ni c
ati
on
s
Clien
t S
er v
ices a
nd
S
up
por t
.
Mi g
rat i
on
Team
Domestic debt
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Greece
Italy
Luxembourg
theNetherlands
Norway
South Africa
Spain
Portugal
Sweden
the United Kingdom
Russia
Switzerland
CS205
Australia
Indonesia
Malaysia
the Philippines
Hong Kong
Thailand
Japan
Singapore
Against paymentFree of payment
Argentina
USA
Canada
Mexico
New Zealand
Equities
CS206
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Italy
Ireland
Hong Kong
Malaysia
Singapore
Japan
Norway
Spain
theNetherlands
Portugal
Sweden
Switzerland
Luxembourg
the United Kingdom
Argentina
USA
Canada
Mexico
SE Settlement
Borrowers
Lenders
Seller
Purchaser
52 %
10 %
Broker/dealers8 %
Other participants4 %
26 %
“No client sector stands by itself”
Fixed income
Equities
Derivatives
Activity breakdown by market segment
Accessing new markets1. Issuance of eurobonds
-> acceptance of denomination currency-> acceptance of settlement currency
SETTLEMENT CURRENCI ES IN EB DENOMI NATION CURRENCI ES I N EBCURRENCY I SO CODE CURRENCY I SO CODE
ARGENTINE PESO ARS UAE DIRHAM AED
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 LBP
KUWAITI DINAR KWD MOROCCAN DIRHAM MAD
LITHUANIAN LITAS LTL MALTESE LIRA MTL
LATVIAN LATS LVL MADEDONIA DENAR (10/10/2005) MKD
MEXICAN NUEVO PESO MXN NICARAGUAN CORDOBA NIO
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) TRL
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
CFA FRANC BCEAO (Sénégal, Côte D'ivoire) XOF
Last update: 23 August 2005 ZAMBIAN KWACHA ZMK
2. Access to the national domestic securities marketsMajor determining factors guiding the decision toservice 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