Euroclear
| Euroclear | |
| |
| Founded | 1968 |
|---|---|
| Headquarters | Brussels, Belgium |
| Key People | Lieve Mostrey, CEO |
| Employees | Over 3,000 |
| Products | Settlement services for bonds, equities and investment funds |
| Website | http://www.euroclear.com/wps/portal |
Euroclear is Europe's largest provider of post-trade services. It is privately owned by more than a hundred shareholders. The Euroclear group includes Euroclear Bank, based in Brussels, as well as the national central securities depositories Euroclear Belgium, Euroclear France, Euroclear Nederland, Euroclear UK and Ireland Euroclear. Euroclear also owns EMXCo, the UK’s leading provider of investment-fund order routing.
It is largely owned by its biggest users, major banks and exchanges such as JPMorgan Chase, Citigroup, ICE and the LSE. Its shareholders also include a number of smaller European financial institutions that are a legacy of a merger in the early 2000s.[1]
As of January 2020, it held more than €28tn of assets in custody. The total value of securities transactions settled by the Euroclear group in 2018 was approximately EUR 791 trillion. [2]
History[edit]
While several entities that are now part of the Euroclear group were established some years earlier, the Euroclear name came into existence in Brussels in the 1960s in response to the development of the eurobond market. The mechanics of settlement in that market before Euroclear were complex, requiring physical delivery of certificates and cash which resulted in long delays and excessive counterparty and market risk. The Brussels office of Morgan Guaranty Trust Company of New York founded the Euroclear System in December 1968 to enhance efficiency and minimize risk in the settlement of USD eurobond transactions. It was the first International Central Securities Depository (ICSD) in the world.
In the early 1970s, the Euroclear System was sold to the market-owned company Euroclear Clearance System Plc, which Morgan Guaranty Trust continued to operate. Euroclear has been user-owned ever since.
Euroclear progressively expanded its service offering to include links to domestic bond, equity and, later on, fund markets. More recently, it also developed products to manage derivatives exposures and settle transactions in emission rights.
Over the years, Euroclear has continually built on its core settlement and safekeeping function, offering extensive wholesale custody, securities lending and borrowing and collateral management services.
This expanded coverage has strengthened the role of the ICSD as a single access point to multiple markets and instruments.
A major development came in 2000 when Euroclear Bank, an independent, user-owned and user-governed company, was launched to assume the operating and banking roles previously carried out by Morgan Guaranty Trust.
Euroclear has since been at the forefront of settlement infrastructure consolidation in Europe. The first step was the outsourcing of the Irish government bond settlement activity by the Central Bank of Ireland to Euroclear Bank in 2000. There then followed an intense phase of mergers with European Central Securities Depositories (CSDs):
- Euroclear France
Joined Euroclear group: January 2001 Established: 1949 as Sicovam Euroclear France is the CSD of France and is established under French law.
- Euroclear Nederland
Joined Euroclear group: May 2002 Established: 1977 as Nederlands Centraal Instituut voor Giraal Effectenverkeer BV (NECIGEF) Euroclear Nederland is the CSD of The Netherlands. All securities transactions settled through Euroclear Nederland are subject to Dutch law and take place in compliance with the Securities Giro Act (Wet Giraal Effectenverkeer).
- Euroclear UK & Ireland
Joined Euroclear group: September 2002 Established: 1993 as CRESTCo, start of operations in 1996 Euroclear UK & Ireland is the CSD for UK securities and Irish equities. It is established as a Recognised Clearing House under the Financial Services and Markets Act and as Operator of the settlement system under the Uncertified Securities Regulations 2001 (as amended).
- Euroclear Belgium
Joined Euroclear group: January 2006 Established: 1967 as Caisse Interprofessionnelle de Dépôts et de Virements de Titres (CIK)/Interprofessionele Effectendeposito- en Girokas Euroclear Belgium is the CSD for Belgium and is incorporated under and subject to Belgian law.
In January 2007, the fund order routing provider EMXCo also became part of the Euroclear group. Established in 1999, EMXCo operates the EMX Message System, which is the de-facto standard for mutual fund order routing in the United Kingdom. This is an important step in Euroclear’s strategy to improve the efficiency of both domestic and cross-border funds processing.
As a result of these mergers, the corporate structure of the Euroclear group was reorganized on Jan. 1, 2005. The international CSD Euroclear Bank, formerly the parent company of the other entities of the group, became a sister company of these entities, and a new non-bank holding company called Euroclear SA/NV became the parent company of all the entities.
Euroclear then began implementing a business model that aimed to make cross-border settlement cheaper and more efficient, in order to help deliver a domestic market for Europe. Euroclear SA/NV is developing the group’s single platform.
Following intensive market-wide consultation, the first stage of Euroclear’s single platform, the Single Settlement Engine (SSE) was fully implemented in early 2007. The SSE consolidates settlement processing across the group entities and is the foundation for future integration.
In November 2007, Euroclear launched the first phase of Euroclear Settlement of Euronext-zone Securities (ESES) to provide the Euronext-zone market CSDs (Euroclear Belgium, Euroclear France and Euroclear Nederland) with an integrated settlement solution and harmonised custody service for stock exchange and over-the-counter activities. The exchange said it was an important intermediary step toward the Single Platform.[3]
In October 2017 Royal Bank of Scotland Group sold its 4 percent stake in Euroclear to Intercontinental Exchange Holdings for EUR 275 million in cash.[4]
In January 2019 the London Stock Exchange said it would buy a minority stake in Euroclear, giving it a role in all parts of a transaction from trading to clearing and settlement.[5]
In October 2021, the global technology investment firm Silver Lake agreed to acquire Intercontinental Exchange’s 9.85% stake in Euroclear Holding SA for €709 million. The transaction is expected to close as soon as the first half of 2022.[6]
Key People[edit]
- Lieve Mostrey, Chief Executive Officer of Euroclear SA/NV
- Frederic Hannequart, Chief Business Development Officer
- Bernard Frenay, Chief Financial Officer
- Jo Van de Velde, Head of Product Management
- Valérie Urbain, Chief Executive Officer of Euroclear Bank (with oversight of Banking & Operations).
References[edit]
- ↑ Euroclear delays decision on sale. The Financial Times.
- ↑ Record year driven by strategic initiatives and positive market conditions. Euroclear.
- ↑ History of Euroclear. Euroclear.
- ↑ Royal Bank of Scotland Exits Euroclear for EUR 275 Million. Morningstar.
- ↑ LSE digs deeper into market infrastructure with Euroclear buy. Reuters.
- ↑ Intercontinental Exchange sells its stake in Euroclear to Silver Lake. The Trade News.