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How Euroclear manages the interoperability with the different markets

Learn how Euroclear promotes interoperability between markets through cooperation, consolidation, and innovative technologies to create a harmonized European domestic market. Explore Euroclear's comprehensive services, including money transfer, settlement, custody, and more. Discover the benefits of Euroclear's business model in reducing costs, risks, and enhancing market efficiency.

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How Euroclear manages the interoperability with the different markets

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  1. How Euroclear manages the interoperability with the different markets

  2. 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

  3. Euroclear Group structure

  4. Turnover Q2 2005 350 307.1 300 256.2 114.4 241.9 250 85.5 85.4 200 171.4 60.1 150 61 52.6 53 100 36.3 132.6 118.1 103.5 50 74.1 0 2002 2003 2004 2005 € trillion 6 months CRESTCo Euroclear Bank Euroclear France ST005

  5. Value of securities held Q2 2005 14.6 0.8 14 13.1 11.9 0.8 3 12 10.9 0.7 2.6 0.7 10 2.4 4.1 2.2 8 3.8 3.5 3.2 6 6.7 4 5.9 5.3 4.8 2 0 2002 2003 2004 2005 € trillion 30 June Euroclear France Euroclear Nederland CRESTCo Euroclear Bank ST006

  6. 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

  7. 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 Consolidation of settlement is necessary to make European capital markets competitive for issuers and investors

  8. Agent Customer Our vision is full consolidation of markets within Euroclear Group Common User Interface CREST Euroclear France Euroclear Netherlands CIK Euroclear Bank Central Banks & Payment systems Domestic Service Full Service Full integration of legacy systems and functionality Single Settlement Engine

  9. Client Communication Interface Core Processing Positioning & booking Legal record Country boundary Legacy From today’s fragmentation towards consolidation Step 1 SSE (2006) Step 2 ESES (2007) Current situation CIK E NL E F E B CIK E NL E F E B CREST CREST CIK E NL E F CREST E B ESES-CCI – e-RGV - E2A ESES - RGV upgrade ESES - SP component SSE SSE Step 3 Single Platform (in phases from 2008) CIK E NL E F CREST E B Legend CCI Single Application Platform SSE

  10. 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

  11. 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

  12. Euroclear Bank’s services Money Transfer Settlement services Custody services Client Services and Support. Migration Team Communications Credit and Banking Services Tri-Party services Lending & Borrowing FundSettle GE014B

  13. Against payment Free of payment Domestic debt Austria Luxembourg the Netherlands Belgium Australia Denmark Norway Hong Kong Finland Portugal Indonesia Argentina France Russia Japan Canada Germany South Africa Malaysia Mexico Greece Spain New Zealand USA the Philippines Sweden Ireland Switzerland Italy Singapore the United Kingdom Thailand CS205

  14. Hong Kong Japan Malaysia Singapore SE Settlement Equities Luxembourg Austria the Netherlands Belgium Denmark the United Kingdom Finland Argentina Norway France Canada Portugal Germany Mexico Spain USA Greece Sweden Ireland Switzerland Italy CS206

  15. Activity breakdown by market segment “No client sector stands by itself” 26 % Borrowers Seller Broker/dealers 8 % Fixed income Equities Derivatives 52 % Other participants 4 % Lenders Purchaser 10 %

  16. Accessing new markets • Issuance of eurobonds • -> acceptance of denomination currency • -> acceptance of settlement currency

  17. Access to the national domestic securities markets • Major determining factors guiding the decision to • service a market International flows • Sufficient international demand from international investors justifying a link • Operational procedure • Service level agreements • Contractual relationship external agents Operational Risk • Choice of agents – depositories (settlement + payments, asset servicing) Reputation Risk • Free access to the currency • Credit Lines with cash correspondents (settlements + payments) Liquidity Risk • Asset protection • Enforceability of contracts Legal Risk

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