euroclear group.pdf

A blueprint for pan-European

settlementThe Euroclear group

MA0001A-Corporate brochure 8/10/04 10:53 AM Page 3

The Euroclear group is the world’s leading settlement provider for domestic and international securities

transactions, covering bonds, equities, investment funds and money-market instruments.

User-owned and user-governed, the group offers securities services — settlement, asset servicing and asset

optimisation — to financial institutions and other users located in over 80 countries.

Euroclear SA/NV is the parent company of the International Central Securities Depository (ICSD) and Central

Securities Depositories (CSDs). The Euroclear group provides both ICSD and CSD services through its various entities:

• Euroclear Bank SA/NV is the ICSD

• Euroclear France SA is the CSD for the French market

• Euroclear Nederland is the CSD for the Dutch market

• CRESTCo Ltd is the CSD for the UK market and Irish equities

The CSDs of the Euroclear group provide services in their respective markets, settling primarily local

securities transactions of the countries they cover. Euroclear Bank, the ICSD of the group, serves as the

settlement infrastructure for the international bond and equities markets, and offers a single entry point

to more than 30 securities markets around the world.

The Euroclear group

We believe in

listening carefully to your

views and interests,

and remain determined to find

ways in which we can provide

improved services that will reduce

your costs and risks, and

enhance the efficiency of

your operations.

User value

The financial marketplace is constantly evolving.

The introduction of the euro, the expansion of the

European Union, deregulation, the erosion of national

boundaries and a broader choice of investment

opportunities all create new needs. As a fragmented

market results in more expensive cross-border trading

and settlement, harmonisation of local market practices

across borders is necessary. The market is demanding

a settlement and asset-servicing infrastructure that

supports pan-European and global investment strate-

gies and that offers streamlined and cost-efficient

service options.

As a market infrastructure, we aim to maximise user

value by developing solutions that help market

participants reduce their own costs and risks, and

increase their efficiency, in a harmonised environment.

Harmonising settlement and asset servicing

We want to create a truly ‘domestic market for

Europe’, to offer an efficient solution for the current

group markets, which can be extended to other

European markets over time. We aim to do this in

a way that is consistent with the G30 and Giovannini

recommendations, and ESCB/CESR regulatory standards.

Meanwhile, we provide support to regulators and

market bodies such as the ECSDA, and for any

initiatives of the European Commission.

Market consultation

Market Advisory Committees (MACs) in France,

Belgium, Ireland, the Netherlands and the UK have

been set up to act as the primary source of feedback

and interaction between the Euroclear group and its

domestic markets.

Delivering a domesticmarket for Europe

CRESTCoEuroclear

FranceEuroclear

BankEuroclear Nederland

CIK

>

>>>> >

LCH.Clearnet

This initiative ensures that each

market’s interests are fully

acknowledged. In addition, the

Cross-border MAC deals with issues

relating to market harmonisation

on a pan-European level.

Working with the marketto offer choice

We have established strategic

alliances with stock exchanges and

clearing houses on a non-exclusive

basis. These partnerships facilitate

efficient straight-through process-

ing, reducing risks and costs

through book-entry settlement.

They also further our commitment

to offer clients a real choice of

settlement location.

LSE virt-x Euronext

The acronyms used stand for: G30 (Group of 30), ESCB/CESR (European System of Central Banks/Committee of European Securities Regulators),ECSDA (European Central Securities Depositories Association)

> >

Objective

Our Business Model outlines a choice of settlement

solutions for Europe to:

• lower cross-border settlement tariffs; and

• reduce the complexity and risks associated with

cross-border settlement.

It offers simple and open access to the five Euroclear

markets — Belgium, France, Ireland, the Netherlands and

the UK, as well as the international reach of Euroclear

Bank, which can be gradually expanded to other markets.

The delivery of a consolidated systems platform

will provide:

• access to securities through a single operational

securities account;

• a common communications interface;

• a choice of payment mechanisms, in either central

bank money or commercial bank money; and

• a choice of service levels and tariffs.

Options for different business requirements

• Domestic service package: available directly through

accounts with the group CSDs under the relevant local

Belgian, Dutch, French, Irish or UK law, in central bank

money. This service will be available for those securities

for which the Euroclear group acts as CSD.

• Full service package: comprises the full range of services

currently offered by Euroclear Bank, under Belgian law,

offered in commercial bank money and central bank

money. This service will be available for all securities held

within the group, as well as for eurobonds and other

securities for which the Euroclear group is not acting

as sole CSD.

Structured implementation

The implementation of the Business Model will proceed

in phases:

• The delivery of the Single Settlement Engine (SSE) —

the fundamental building block — by the end of 2006

will centralise the settlement positioning processes of

the Euroclear group.

• The launch of the Euronext-zone settlement solution —

an important intermediary step — by the end of 2007

will provide a harmonised settlement platform for the

straight-through processing of trades from Euronext‘s

single order book.

• The objectives of the Business Model will be achieved

by the completion of the Single Application Platform

(SAP) and the Common Communications Interface (CCI)

forming the single platform.

BusinessModel

Full integration

D o m e s t i c s e r v i c e

S h a r e d c o s t s ( s i n g l e p l a t f o r m )

F u l l s e r v i c e

> > >

Client Client Client

>

EuroclearBank

Agent bank

The Business Model will offer a choice of two service packages designed to meet your specific business requirements.

Transparency is crucial to guarantee support for

the process of change and harmonisation initiated

by the Euroclear group, all the more so as the group

includes both national CSDs and an ICSD with different

service offerings and competitive environments.

As a user-owned and user-governed company, we

have made information concerning the group’s

developments and projects more widely available.

We are also focusing on continuous consultation

with the market.

Market consultation

We are actively engaged in consultation with clients

in each of the markets where we act as CSD, and with

our international clients, as part of our continuous

policy to involve all stakeholders in our evolution and

that of the market.

Dialogue with the market is maintained mainly

through numerous consultation papers, and feedback

documents. They outline our views and seek market

input on the Euroclear Business Model and the

harmonisation of market practices and summarise

market responses.

Moreover, the MACs that have been established in

each domestic market where we act as CSD, as well as

the Cross-border MAC covering all group domestic

markets, have proved to be an essential and effective

source of market feedback and input.

Transparencyand user governance

A new corporate structure has been implemented

(as from January 2005) in order to:

• maximise client protection against systemic risk;

• improve transparency in inter-company service

delivery and cost allocation; and

• increase the flexibility of the corporate structure

for potential future alliances and mergers.

The restructuring has resulted in the formation of

Euroclear SA/NV which owns and operates the shared

systems, such as the SSE, and provides shared services

to all Euroclear group entities. CRESTCo, Euroclear

Bank, Euroclear France and Euroclear Nederland are

subsidiaries of Euroclear SA/NV.

Corporatestructure

Euroclear Bank SA/NV Euroclear France SA Euroclear Nederland CRESTCo Ltd

Paris Amsterdam London

Euroclear SA/NV

Euroclear Investments SA

Euroclear plc

>>

> > >

> > > >

>

Globalreach The ICSD function

Euroclear Bank offers a single access point to over 30 securities

markets worldwide, and is the premier provider of settlement

services for international securities.

As the ICSD, Euroclear Bank settles mainly non-domestic, cross-

border transactions, where the counterparties are typically located

in different countries.

An extensive range of core and value-added services — settlement

of over-the-counter (OTC) and stock exchange trades, asset

servicing and asset optimisation — are available to clients along

with proactive client support.

Euroclear France

Euroclear Nederland

CRESTCo

Euroclear CSDs serve as local settlement systems, where

the securities transactions of the countries they cover are

settled. They also provide asset servicing facilities, which

vary from market to market, and depend on local practices

and regulations.

These highly secure, automated and very efficient settle-

ment systems offer clients a variety of services combined

with low-cost central bank money settlement.

Euroclear Bank

Localefficiency The CSD function

Settlement

• DVP model 11

• Stock exchange2/OTC

• Commercial and central bank money

• Multi-currency

(over 30 settlement currencies)

• Bilateral financing instructions

• Order routing and processing for funds

(FundSettle)

• ETCMS

• DVP model 11


• Central bank money

• Monetary Policy operations

• DVP model 11



• Multi-currency

• DVP model 11



• Multi-currency (GBP, USD and EUR)

• Central counterparty services

Asset servicing

• Safekeeping (over 80 issuer countries)

• Proactive tax assistance (over 30 markets)

• Corporate actions

• Electronic proxy voting

• Market claims management

• Default management

• New issues services

• Income and redemptions

• Safekeeping

• Depository services



• Shareholder identification services

> Titre au Porteur Identifiable (TPI)

> Nominatif



• Safekeeping

• Securities administration



• Giro-based securities traffic



• Legal title for UK securities within CREST

• Tax assistance and Stamp Duty


• Electronic proxy voting


• Automatic transformations

• Issuer services


• Physical stock deposits and withdrawals


Asset optimisation

• Securities lending and borrowing

• Integrated Collateral Management

> triparty repo

> triparty securities lending

> triparty derivatives support

> triparty secured loans

> triparty collateral services

• Money transfer

• Banking services

• Collateral management

• Money transfer for DVP settlement

• Refinancing

• Delivery by Value (DBV)

• Stock loans

• Repos

• Central counterparty services

1 Delivery versus payment with simultaneous andirrevocable transfer of cash and securities

2 Austria, France, Greece, Luxembourg, Portugal,Spain, UK, virt-x, Euronext and London StockExchange (LSE)

3 Euronext4 Euronext, DTS segment of LSE5 LSE, Irish Stock Exchange and virt-x

Group service

offeringEuroclear Bank

Euroclear France

Euroclear Nederland

CRESTCo

Connecting within

Europeand beyond

MA0001A-Corporate brochure 8/10/04 11:01 AM Page 26

EuroclearBank

Euroclear Bank is an ICSD, providing

a Delivery versus Payment (DVP)

settlement system (DVP1 model) for

internationally traded securities.

Securities accepted may be in either

physical or dematerialised form and

include a range of domestic,

international and global securities:

• debt securities;

• equities;

• investment funds;

• depository receipts; and

• warrants and similar securities.

The provision of intra-day credit

to manage the timing gaps that

arise from cross-border settlement

represents an essential component

of DVP and enhances settlement

efficiency for the cross-border

securities markets.

The risks associated with the services

provided are very prudently managed

through the use of policies and

procedures which have minimised

credit, liquidity, market, legal and

operational risks.

Services are offered to major

financial institutions in more than

80 countries.

Headquarters: BrusselsEstablished: 1968

Local offices: Hong Kong, London (until 30 March2005), New York, São Paulo, Singapore,Tokyo

Clients: About 1,500, including majorbanks, broker/dealers, custodians, central banks, and other securities professionals

MA0001-Corporate inserts def 27/1/05 4:07 PM Page 2

Set t lement

Settlement services include:

• multi-currency settlement (in over

30 settlement currencies);

• settlement in both central bank

money and commercial bank

money with full access to intra-day

liquidity;

• bilateral financing instructions;

• FundSettle: a dedicated fund

processing platform; and

• Euroclear Trade Capture and

Matching System (ETCMS).

Asset ser v ic ing

Asset servicing covers all markets

in the eurozone and key markets

around the world and includes:

• Custody and safekeeping of

securities via a network of

Euroclear Depositaries. Securities

are held through Depositaries,

custodian banks or directly in

local settlement systems.

• Custodial services, such as the

monitoring and processing of

income, corporate events, tax

reclaim or ‘relief at source’.

• Services to assist issuers, lead

managers and issuing and paying

agents with the procedures for

distributing new issues against

or free of payment. These services

cover syndicated distribution

(distribution by lead managers),

or the non-syndicated procedure

(distribution by issuing agents).

Asset opt im isa t ionAsset opt im isa t ion

Asset opt im isa t ion

Integrated Collateral Management

These services support clients’ bilateral

repurchase agreements, securities

loans, secured loan facilities, deriva-

tives transactions and margining for

central counterparties.

There are five collateral manage-

ment products:

• triparty repo;

• triparty securities lending;

• triparty derivatives support;

• triparty secured loans; and

• triparty exchange and netting

support.

Securities lending and borrowing

Enables clients to borrow securities

to avoid failing to deliver securities,

both in batch and real-time settlement.

Lenders with available positions can

use this service to increase the yield

on their securities portfolios.


Money transfer

Cash can be transferred in and out

of the system in any of the 30 or so

eligible settlement currencies,

offering clients a means of efficient

cash management — mostly on a

same-day basis.

Banking services

Uncommitted secured credit facilities

allow clients to enhance their

settlement efficiency and avoid

unnecessary settlement fails.

Communica t ions

Screen-based access

Allows real-time validation and

matching and immediate comprehen-

sive feedback, and comprises:

Internet-based applications

• FundSettle: internet-based

browser that gives easy access

to FundSettle; or

• Triweb and Biweb: internet

reporting tools that provide

information on Integrated

Collateral Management.

Software applications

EUCLID PC Plus is a Windows®-based

software application, and is the

most cost-effective way to access

all services.

Computer-to-computer access

Euroclear Bank offers the following

communications channels:

• EUCLID Server Plus;

• EUCLID file transfer and FundSettle

file transfer; and

• SWIFT.


Euroclear Bank SA/NV

1 Boulevard du Roi Albert II

B-1210 Brussels,

Belgium

Tel: +32 (0)2 224 1211

www.euroclear.com

Euroclear is the marketingname for the Euroclear System,Euroclear plc, Euroclear SA/NVand their affiliates. © 2005 Euroclear SA/NV


1 listed in the Euroclear France operating rules and general rules of the Conseil des Marchés Financiers

Office: Paris

Established: 1949 as Sicovam

Merger with Euroclear:

January 2001

Clients: Over 300, representing French

and some foreign financial institutions

EuroclearFrance

Euroclear France is the CSD of France

and the operator of the Relit+ and

RGV settlement systems.

Services are offered in the areas of:

• custody (physical and book-entry);

• securities and cash settlement;

• matching and trade confirmation

between counterparties and

custodians;

• collateral management; and

• a wide range of issuer services.

The custody service range covers:

• debt instruments;

• equities and related instruments

(ETFs, warrants);

• funds; and

• international securities.

Securities are held in the system in

either dematerialised or physical

form, through a foreign depository.

Issuer, custody and settlement

services comply with the security

and efficiency recommendations laid

down by international bodies such as

the G30 and International Securities

Services Association (ISSA).

In addition to recognised CSDs,

banks, brokers, foreign institutions

and other entities1 can be direct

members.


Set t lement

RGV (irrevocable) and Relit+

(revocable), the two settlement

platforms, handle all types of back-

office operations, and offer:

• stock exchange and OTC settlement;

• DVP and FOP settlement;

• real-time and overnight

processing; and

• internal book-entry and

cross-border settlement.

Asset ser v ic ing

Safekeeping

Effective custody services and total

security of holdings:

• real-time securities information;

• specific asset management possibili-

ties, with a sub-accounting system

for bearer and registered securities;

• optional segregation of assets (up

to end-investor level); and

• secure accounts organisation based

on double-entry book-keeping.

Corporate actions management

Fully automated corporate actions

management:

• execution of corporate actions;

• market claims management; and

• real-time reporting.

Income and redemptions

For all securities eligible for the

direct payment procedure.

An efficient service that facilitates

income and redemption payments

on the due date.

Shareholder identification

For securities in bearer form

The TPI (Titre au Porteur Identifiable/

Identifiable bearer security) service

allows issuers of bearer securities

to request and receive detailed

information on the identity of their

shareholders.

For securities in registered form

Allows issuers of registered securities

to receive information on a continuous

basis concerning any change in their

shareholders.



Collateral management

A global collateral management

solution is offered, allowing clients

to meet all liquidity needs from a

single pool of assets.

Money transfer

Euroclear France has a direct link,

via RGV, with the TBF and TARGET

systems, ensuring smooth cash

settlement of securities transactions

and asset management.

Refinancing

Clients can carry out refinancing

transactions quickly and safely using

the RGV system, whilst benefiting

from services to optimise refinancing

transactions and Monetary Policy

operations. It also allows the funding

of cash accounts with intra-day

liquidity.

Communica t ions

E2A

An innovative Internet Protocol (IP)

based communication architecture

offering direct access to the settle-

ment system. The E2A application:

• provides users with a choice of

communications channels, due to

the range of IP network providers;

• allows users to communicate via

file transfer and/or MQSeries; and

• communicates with different plat-

forms; currently Relit+ and RGV.

eRGV

The eRGV system is a new version of

the RGV workstation, allowing access

to the settlement system via an IP

network. It has been designed to

make optimum use of the Relit+

and RGV systems, via the internet.


Euroclear France SA

115, Rue Réaumur

F-75081 Paris, Cedex 02,

France

Tel: +33 (0)15534 5534

www.euroclear.com



Euroclear Nederland

Euroclear Nederland1, the CSD of

the Netherlands, provides real-time

settlement, custody and securities

administration services for capital

market paper and money market

paper.

Giro-based securities traffic is

managed on behalf of clients,

as defined under the Wet Giraal

Effectenverkeer (Securities Giro Act),

including:

• the registration of master data;

• account administration; and

• transactions settlement.

Securities are accepted in bearer and

registered form and all types of equi-

ties are eligible for (giro) transfer.

Custody services are offered for:

• equities;

• warrants;

• commercial and government

bonds; and

• commercial and government

money market paper.

All securities transactions effected

are subject to Dutch law and take

place in compliance with the Giro

Securities Act. The Authorities —

Financial Markets, and the Ministry

of Finance — supervise all activities,

and De Nederlandsche Bank N.V.

(DNB), the Dutch Central Bank,

monitors systemic risk.

In addition to recognised CSDs,

Dutch credit institutions and foreign

clients (in possession of a European

passport) active in capital market

paper and/or money market paper

can be direct participants.

1 Euroclear Nederland is the business name for the Dutch Central Securities Depository, the Nederlands Centraal Instituut voorGiraal Effectenverkeer BV, formerly known as NECIGEF

Office: Amsterdam

Established: 1977 as NECIGEF

Merger with Euroclear:

May 2002

Clients: Around 100, representing

Dutch and foreign banks


Set t lement

The settlement of transactions is

carried out using DVP model 1.

Instructions are settled for both

securities and funds on a trade-

by-trade basis, with delivery and

payment occurring simultaneously.

Operations are carried out exclusively

on the basis of gross settlement

(trade-for-trade settlement) for OTC

transactions. Euronext stock exchange

transactions and the resulting feed

from LCH.Clearnet are netted.

Securities transactions are settled

on a real-time basis. Consequently,

reports to clients on the status of

their instructions are also provided

in real time.

Cash settlement of securities trans-

actions takes place in central bank

money, and is conducted via the cash

accounts of DNB in euro or, in the

case of foreign currencies, via Kas

Associatie NV.

Asset ser v ic ing

Safekeeping

Most Dutch securities are immo-

bilised in the vaults of Euroclear

Nederland and its subsidiary

Euroclear NIEC (Nederlands Inter-

professioneel Effecten Centrum),

which also holds registered shares

and Dutch lottery bonds.

Third party custodians/depositories

are only used for safekeeping of

certain dual-listed and international

securities.

Income and redemptions

Administration of the cashing and

settlement of coupons, cash dividends

and redemptions (income and capital)

as well as mandatory conversions.


Market claims management

Claims from cum-ex deliveries for

clients are dealt with and, in the

case of optional conversions, the

conversion rights are determined

and allocated. Clients exercise these

rights themselves.

Issuer services

Issuers are assisted in relation to the

optimal choice of denominations and

receive help to follow the adminis-

trative and operational procedures

relating to a new issue.

Communica t ions

Clients are offered the possibility of

communicating either:

• via SWIFT ISO 15022 using the

standard SWIFTNet FIN network

infrastructure; or

• by logging on to an online

terminal which provides

remote access via the SWIFTNet

webstation.


Euroclear Nederland

Beursplein 5

NL-1012 LM Amsterdam

The Netherlands

Tel: +31 (0)20 530 1500

www.euroclear.com



CRESTCo

CRESTCo is the CSD for the UK and

Ireland, and operates the CREST

system.

Advanced, low-cost settlement facili-

ties are provided for a wide range of

corporate and government securities,

including those traded on the

London and Irish Stock Exchanges

and virt-x. CREST also settles money

market instruments and funds, plus a

variety of international securities.

CRESTCo is regulated by the UK’s

Financial Services Authority. CREST

is one of the most efficient systems

worldwide and is a leader in settle-

ment risk reduction.

Membership is available for firms

and for individuals.

Office: LondonEstablished: 1993, start of operations in 1996

Merger with Euroclear: September 2002

Clients: 275 users who act for over40,000 corporate and individual members of CREST


Set t lement

CREST provides real-time settlement

(on trade date if required) allowing

users to monitor and manage their

transactions throughout the day.

DVP in central bank money is

provided, with simultaneous and

irrevocable transfer of cash and

securities (DVP model 1).

Full legal title is transferred at the

point of settlement for all UK regis-

tered shares and government bonds.

Credit facilities are provided by a

range of commercial payment banks,

and multiple currencies are supported

(currently GBP, EUR and USD).

Optional settlement netting is

available for trades executed through

the London Stock Exchange’s SETS

platform, cleared through the

LCH.Clearnet service, and settled in

CREST. The same service is also avail-

able for virt-x trades in UK securities.

Direct links to US and European

settlement systems allow settlement

in 18 international markets.

Asset ser v ic ing

Full corporate action services are

offered, as well as a range of services

for registration and new issues:

• automated production of market

claims;

• automatic transformations of

open transactions during company

reorganisations and buyer protec-

tion for all relevant events; and

• the possibility for users to electron-

ically appoint and instruct proxies

at company meetings.

A new facility has been introduced to

distribute income payments and asso-

ciated dematerialised tax vouchers.

• Calculation and collection of stamp

duty from members on behalf of

the Inland Revenue and the Irish

Revenue Commissioners.

• Tax assistance, including a foreign

withholding tax reclaim service, is

also available as part of the inter-

national service.




A central counterparty service for

electronically executed trades on

SETS and SEAQ Crosses is operated

together with LCH.Clearnet and the

London Stock Exchange. This delivers

full counterparty anonymity and

improved counterparty risk protec-

tion by introducing LCH.Clearnet

as the central counterparty to the

market. A similar central counterparty

service is available for virt-x trades in

UK securities.

Financing is available from third

parties using transactions known as

Deliveries by Value (DBVs).

A full and flexible stock borrowing

and repo functionality is offered.

Same-day settlement is handled,

allowing firms to arrange, execute

and settle their borrowing needs

within a matter of minutes. Daily

stock lending and settlement per-

formance data is available on the

CRESTCo website as a subscription

service.

Members are able to obtain reports

on open positions and liquidity

projections.

Communica t ions

Communica t ions

Firms with the hardware and soft-

ware to connect directly to our

system are known as users. A firm

can also connect through a user as

a sponsored member.

Users can communicate via any

of the three currently accredited

networks to exchange electronic

messages.

Users can access the system via:

• file transfer or MQSeries messaging,

using standard ISO 15022 or CREST

proprietary messaging; or

• a PC-based Graphical User

Interface (GUI) software, which

gives access to the full range of

CREST functionality.

Users can connect from their own

back-office systems with interfaces

developed by themselves or

commercial software providers.


CRESTCo Ltd

33 Cannon Street

GB-London EC4M 5SB

United Kingdom

Tel: +44 (0)20 7849 0000

www.crestco.co.uk

www.euroclear.com



Euroclear SA/NV

Euroclear Bank SA/NV

1 Boulevard du Roi Albert II

B-1210 Brussels,

Belgium

Tel: +32 (0)2 224 1211

Euroclear SA/NV

Euroclear France SA

115, Rue Réaumur

F-75081 Paris, Cedex 02

France

Tel: +33 (0)15534 5534

Euroclear SA/NV

Euroclear Nederland

Beursplein 5

NL-1012 LM Amsterdam

The Netherlands

Tel: +31 (0)20 530 1500

Euroclear SA/NV

CRESTCo Ltd

33 Cannon Street

GB-London EC4M 5SB

United Kingdom

Tel: +44 (0)20 7849 0000

www.euroclear.com

Euroclear is the marketing namefor the Euroclear System,Euroclear plc, Euroclear SA/NVand their affiliates. © 2005 Euroclear SA/NV

Documents

euroclear group.pdf