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Euroclear Interconnecting the CSD

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					                                          External Use




                        Euroclear
                        Interconnecting
                        the CSD
Presentation at AMEDA
Marrakech, 21 October 2009
By Bernard Ferran
Agenda                                        External Use


   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




                                                        2
Euroclear group                                                                    External Use
Ownership structure
                 201 user              Euroclear
                 shareholders                         Sicovam Holding
                                          plc




                                       Euroclear
                                        SA/NV




Euroclear   Euroclear      Euroclear    Euroclear   Euroclear     Euroclear       Euroclear
  Bank       Belgium        France      Finland *   Nederland    UK & Ireland     Sweden *

                                                                                                 3


                                                                                * NCSD Holding
Euroclear group
                  External Use
Key Figures




                            4
Euroclear group
                                                                                         External Use
In the world…




                                                         Euroclear Finland
                                                         Helsinki, Finland
                                                     Euroclear Sweden
                                                     Stockholm, Sweden
       Representative                          Representative office               Representative office
               office                          Frankfurt, Germany                  Tokyo, Japan
       New York, USA                           Euroclear Nederland           Representative office
                                               Amsterdam, The Netherlands    Beijing, China
                                       EMXCo
               Hertfordshire, United Kingdom   Euroclear Bank                 Euroclear Bank Branch
                                               Euroclear Belgium              Hong Kong, China
                      Euroclear UK & Ireland   Brussels, Belgium
                                    Xtrakter   Euroclear France                Representative office
                    London, United Kingdom     Paris, France                   Singapore, Singapore        5


          Euroclear serves clients in their own language across time zones
  Euroclear Group                                                              External Use
  Reduces overall cost and risk for the market

                                                          Risks mitigation through
       Industry with large economies
                   of scale                         - Harmonisation     − Standardisation
                                                    - Automation        − Central
                                                                          Counter-Party

         Unit Costs                                          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                                                                                 6
 Euroclear Group                                                 External Use
 Today

• 869 European Participants       • More than 50% of foreign holdings
• 576 non-European Participants     in European Government bonds


• 22 European markets             • More than 60% of total German
• 18 non-European markets           bond settlement


• More than 400,000 bonds,        • Approximately EUR 250 bn cross-market,
  equities and funds                cross-instrument triparty collateral

• Close to 85% turnover market
  share vis-à-vis Clearstream


                                                                            7


                                                                           ST008
Agenda
                                              External Use


   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




                                                        8
Focus on Euroclear Bank
                                                        External Use
Features

   User-governed

   Belgian incorporated bank

   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)
                                                                  9
Focus on Euroclear Bank                                    External Use
Total: 1332 clients
                                 North America
                        Japan    11.4%
                          5.2%             Latin America
                 Asia                      4.8%
               13.6%

            Africa
             0.9%                                Europe
       Middle East                              44.2%
              4%


                  UK
               15.9%


                                                                     10


                                                                     ST009
Focus on Euroclear Bank
                                                                                                 External Use
Full services offered


        Settlement                      Asset Servicing                      Asset Optimisation




The Euroclear group is the world's     Asset servicing is the family of       Asset optimisation is the family of
 largest provider of domestic and     services comprising all custody,       Euroclear services assisting clients
   cross-border settlement and         new issues and issuer services           to optimise their asset usage,
 related services for bond, equity   provided by the Euroclear (I)CSDs.      primarily in view of optimising the
and fund transactions. Settlement    Asset servicing is a core activity of   settlement process but also in the
is both a core service and a core     the group at an equal level with          form of, for example, triparty
       strength of the group                     settlement                               operations




                                                                                                                    11
Focus on Euroclear Bank
                                                                 External Use
Your direct access to markets
   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.
                                                                            12


   40,000 mutual and hedge funds
Agenda                                        External Use


   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




                                                        13
  Domestic Market for Europe
                                                                                                External Use
  European trading, clearing and settlement
  still very fragmented

            Sweden                   Belgium
            Finland       France    Netherlands    UK    Italy   Germany      Spain       Switzerland     Norway


                                                                                                           OLSO
Trading       OMX                EURONEXT          LSE   BORSA    DBAG         BME           SWX
                                                                                                           BORS



              OMX                                                                                           NOS
             Clearing                                                                      X-CLEAR
Clearing                            LCH CLEARNET         CCG      EUREX    MEFF CLEAR                    (derivative
           (derivatives                                                                      (SIS)
                                                                                                           s only)
              only)


                                                                                           SIS (SEGA     VPS (Olso
CSD                        Euroclear Group                M.T.     CBF      IBERCLEAR
                                                                                          INTERSETTLE)     Bors)


                                                                                Link-Up Markets
                                                                     (+ Denmark, Austria and Greece/Cyprus)
                    User-Owned



                                                                                                                14
Domestic Market for Europe                                   External Use
The answer of Euroclear Group

                Transforming
                cross-border         Systems
               settlement into     consolidation
            „internal book-entry
                 settlement‟

   Delivering                                      Creating a
       a                                              single
   domestic                                        platform for
   market for                                          pan-
    Europe                                          European
                                                   settlement

                Consolidating
                multi-market
                                   Harmonisation
                 settlement
                and custody
                                                                       15
Domestic Market for Europe                                                    External Use
The implementation of the Single Platform
is progressing well                 SSE ESES                            SPC      SPCM
                                                                                 SPTM
• Single Settlement Engine with technical netting          
• Common Communication Infrastructure providing a
  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         100%   100%   73%      19%
                                                                                         16
 Domestic Market for Europe                                                                               External Use
 Delivering the building blocks of single platform...

Communication                 Collateral                   Service                         Benefits of full Single
Infrastructure                Management                   Enhancements                    Platform

                                                                                               Group account structure

   ISO messages                 Pooling of assets           Transaction
                                                               management                      Harmonised settlement
                                                                                               instruction lifecycle
   Harmonised user screens      Interoperability
                                                              Matching at party level
                                  between full/domestic

   Dual network providers
                                 Access to central bank
                                                               Improved                       Internalisation of full &
                                  liquidity                   interoperability with          domestic settlement
 Synchronous validation                                       group markets
                                                                                              Group billing
 Harmonised validation                                       Partialling and splitting
    and matching              Dedicated Liquidity
                              Model

                               Dedicated liquidity
                               Demand-driven auto-
                                  collateralisation
                                                                                                                          17
Domestic Market for Europe
                             External Use
Timelines




                                       18
Agenda
                                              External Use


   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




                                                        19
TARGET2 - Securities
                                                               External Use
Scope of proposal
   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

                                                                         20
TARGET2 - Securities                                                  External Use
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”

                                                                                21
                                                 ECB, December 2007
TARGET2 - Securities                                                        External Use
Changes implied
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                             22
TARGET2 - Securities
                                                                 External Use
Clients‟ requirements

   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)



                                                                           23
    TARGET2 - Securities                                                                                                  External Use
    Euroclear to address different clients‟ needs …
                                                                               CCI

                           1. Full range of markets    2. Single access to Euro-     3.Single access to Euro-       4. Direct access to
SERVICE
                                 and services                zone securities              zone securities             Group markets
   Asset holding                             Euroclear Bank                               One of the CSD of Euroclear Group
                                     Commercial Bank Money (CoBM)
   Settlement                                                                             CentraL bank Money (CeBM) on T2S
                               On Single Platform                On T2S
   Asset servicing                Enhanced                    Enhanced                    Enhanced                  Commoditised
   Collateral mgt and
                                                                                                                         
    collateral pooling
   L&B                                                                                                                 N/A
   Single ISO compliant
                                                                                                                         
    access (CCI)

ELIGIBLE SECURITIES                    All                   Euro-zone (T2S)             Euro-zone (T2S)        Group CSD securities

                              Global coverage            Single access to T2S       Single access to T2S        Direct access
                                                           settlement in CoBM          settlement in CeBM
                              Strong integration of                                                               Harmonised CA
KEY BENEFITS                   services                   Direct settlement                                        processes across
                                                           feeds / primary                                          Group markets
                              No migration impact
                                                           dealership
                               with T2S                                                                                                   24
TARGET2 - Securities
                                                                    External Use
... supported by Single Platform developments

        CCI                                     A single access



        SPC               Access to full range of asset servicing




        SPCM                          A single pool of collateral




                                        SPTM
                                  (Single Platform
                                    Transaction
                                  Management)

                                                                              25
Agenda                                        External Use


   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




                                                        26
Link Up Markets   External Use




                            27
Link Up Markets   External Use
Example




                            28
Agenda                                        External Use


   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




                                                        29
Connecting the CSD to Euroclear Bank
                                                                    External Use
Access to local markets

         Clients
    Clients / Investors             Clients
                               Clients / Investors        Clients
                                                     Clients / Investors



       Global                     Global                Global
     Custodians
     custodians                 Custodians
                                custodians            Custodians
                                                      custodians



                                                       Local agent
     Local agent                                        Local agent
                                                     Partial or Full support




        CSD
        CSD                         CSD
                                    CSD                    CSD


                          Flexibility per market
                                                                               30
Connecting the CSD to Euroclear Bank
                                                                        External Use
Access to local markets

             Clients
       Clients / investors                              Clients
                                                  Clients / investors




            CSD
           CSD                                         CSD
                                                      CSD




                                                   Euroclear Bank
         Issuing CSD                              (single account)
            CSD                                        CSD
                                                     40 markets


                             Flexibility per market
                                                                                  31
Connecting the CSD to Euroclear Bank
                                                                               External Use
What can Euroclear Bank offer you ?
   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
                                                                                         32
Connecting the CSD to Euroclear Bank
                                                                    External Use
What can Euroclear Bank offer you ?
   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
                                                                              33
Connecting the CSD to Euroclear Bank
                                                                External Use
Why you should connect to Euroclear Bank ?

   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         34
External Use

				
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