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Clearstream Entering New Markets: Challenges for Emerging Securities Markets Gaining ICSD access. Jan Willems Vice President Sales and Relationship Manager Clearstream Banking Luxembourg. The “Markets Company”. Integrated solutions for clients. Excellent and stable credit rating - PowerPoint PPT Presentation
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Client: Title:
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G 153
B 153
R 102
G 102
B 102
R 0
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R 0
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R 95
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R 255
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G 199
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Clearstream Entering New Markets: Challenges for Emerging Securities Markets Gaining ICSD accessJan Willems
Vice President
Sales and Relationship Manager
Clearstream Banking Luxembourg
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
Deutsche Börse Group
Trading, listing, infrastructure partnerships across the globe
The “Markets Company”Integrated solutions for clients
Cash markets
Central Counterparty Services (CCP) Eurex Clearinghouse
Open settlement model
Derivatives markets
Fixed income markets
Investment Fund markets
Settlement, custody and securities financing
OTC
ETFsOn exchange
OTC
Excellent and stable credit rating
Credit rating of
Clearstream
AA/Stable/A-1+
Current ratings
Counterparty credit
AA/Stable/A-1+
Certificate of deposit
AA/A-1+
Commercial paper
Local currency A-1+
Foreign currency
Sovereign rating
Luxembourg
AAA/Stable/A-1+
Related entities
Deutsche Börse Group
AA/Stable/A-1+
October 6, 2011 2The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
1970: Cedel (as we were initially called) was established by 66 financial institutions from 11 countries to reduce the costs and risks of settling securities transactions in the Eurobond market.
1995: in January, a new corporate structure was introduced,
establishing a parent company – Cedel International – with a
subsidiary company, Cedelbank; two years later, a new subsidiary –
Cedel Global Services – was established.
2000: Clearstream International was formed through the merger of
Cedel International & Deutsche Börse Clearing, a Deutsche Börse AG
subsidiary.
2002: in July, Clearstream became a wholly owned subsidiary of
Deutsche Börse Group.
2010: “Clearstream 2013” sets out strategic goals that will enable
us to effectively differentiate our company in the future competitive
environment.
40 years in brief
October 6, 2011 3The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
Clearstream today
Settlement‒Delivery of securities v payment for over 114 million transactions pa
‒Reassignment of the ownership of the security and payment
‒94 currencies eligible (42 eligible for settlement)Asset services‒Assets under custody exceeding €11 trillion
‒More than 400,000 securities holdings
‒Servicing income, corporate actions and tax eventsGlobal Securities Financing‒Securities lending and borrowing
‒Tripartite repo and collateral management
‒More than €576 billion monthly average outstandingsInvestment Funds Services‒Series of solutions for investment funds (Vestima+, Central Facility for Funds
‒5.2 million transactions pa over 82,000 investment fundsOther services‒Complete suite of connectivity for customers and providers to access the Creation platform
‒Cash managementOctober 6, 2011 4The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
Clearstream’s core business
Clearstream Banking Frankfurt (CSD)
Clearstream Banking Luxembourg (ICSD)
400 German banks & remote international partners
2,500 customers in 100 countries
Domestic German equities and bonds, international assets
Eurobonds, domestic bonds, equities, investment funds, etc
9 CSD links & international business with ICSD
52 markets worldwide via network of sub-custodians & direct CSD links
Custody and collateral management services
Full range of custody and collateral management services
Customers
Securities
Markets
Assetservices
October 6, 2011 5The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
Single point of access to 52 domestic markets worldwide
33 markets in Europe
AustriaBelgiumBulgariaCroatiaCyprus
Czech RepublicDenmark
EstoniaFinlandFrance
GermanyGreece
United KingdomHungary
IcelandIreland
ItalyLatvia
LithuaniaLuxembourg
MaltaNetherlands
NorwayPoland
PortugalRomania
RussiaSlovakiaSlovenia
Spain Sweden
SwitzerlandTurkey
ArgentinaAustralia
BrazilCanada
ChinaDubai
Hong KongIndonesia
IsraelJapan
MalaysiaMexico
New ZealandSingapore
South AfricaSouth Korea
Thailand Uruguay
USA
19 worldwide
+ the International market and Global Emissions MarketOctober 6, 2011 6The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ Omnibus concept, nominee concept‒ Freely transferable and fungible shares‒ No restrictions on FX of income proceeds‒ Maximum Withholding at Source possibilities‒ Maximum security through accounts in local CSD
operated by local bank (in emerging markets, subsidiary of G20 bank)
‒ Absence of Stamp Duty‒ Swift compliant market‒ AML/KYC robust
What Clearstream and foreign investors are looking for
October 6, 2011 7The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ Upfront investment of over EUR 400K in IT and system development for a full securities link and recurrent annual costs for each link (compliance, due diligence, etc …)
‒ Run-up period of over 1-2 years (from RFI to RFP to validation and testing to implementation)
‒ Changing appetite of investors («flavour of the day»)‒ Local rules change during the set-up process‒ Correct prices and correct collateral validation‒ Finding a reliable local partner or finding a local CSD
that allows accounts of ICSDs‒ Geo-political market risks linked to a link, threatening
our client’s interests
Challenges for Clearstream
October 6, 2011 8The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
Background:‒Small market, but nonetheless foreign interest‒Challenge: avoid set-up costs (+/- EUR 400K), but nonetheless provide link to foreign investors
Solution:‒Clearstream Banking Frankfurt opens account on the books of Maltese CSD and Maltese CSD opens account on the books of Clearstream Banking Frankfurt‒Maltese CSD operates both accounts. ‒Free of payment transactions only at first stage
Malta model
October 6, 2011 9The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ All securities are created book-entry in Malta and reflected in Maltese CSD account in Clearstream Banking Frankfurt
‒ From Maltese CSD account in Clearstream Banking Frankfurt, all securities are moved across both CSD and ICSD accounts
‒ All Maltese isin code become Clearstream Banking Frankfurt and Clearstream Banking Luxembourg eligible
‒ Clearstream Banking Luxembourg uses Clearstream Banking Frankfurt as sub-custodian
‒ Constant reconciliation between omnibus account of CBF at Maltese CSD and Maltese positions in CBF (1/1)
Malta model continued
October 6, 2011 10The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ Legal opinion to see if no issues with neither the securities nor the remote CSD under German Law
‒ Possibility of remote CSD to work either with SWIFT or with propriety system, CASCADE
‒ If non-EUR securities, possibility to pay income in either EUR, USD or CHF
Pre-requisities of model
October 6, 2011 11The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ Easy and cheap to implement‒ Much faster time-to-market‒ Secure infrastructure of Clearstream Banking
Frankfurt, giving access to Clearstream Banking Luxembourg
‒ Local shares can become Xetra eligible‒ Access to over 2,500 different world-wide financial
institutions
Benefits of model
October 6, 2011 12The 1st International Joint Conference of AECSD and IAEx of CIS
Client: Title:
R 51
G 153
B 153
R 102
G 102
B 102
R 0
G 0
B 0
R 0
G 0
B 153
R 95
G 55
B 153
R 191
G 34
B 150
R 224
G 0
B 52
R 255
G 102
B 0
R 0
G 199
B 139
‒ Think ahead: it takes market infrastructures like ICSDs months (or years) to link to emerging/frontier markets
‒ Consult with ICSDs, making use of 40 years expertise in creating technical, operational and regulatory conditions to offer ICSD access
‒ Keep your market as operationally simple as possible. Successfull emerging/frontier securities markets are those with a simple, straight-forward set-up
Conclusion: what does this all mean for my market?
October 6, 2011 13The 1st International Joint Conference of AECSD and IAEx of CIS
