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New generation of processing environment October 2008 Jan Willems.

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Presentation on theme: "New generation of processing environment October 2008 Jan Willems."— Presentation transcript:

1 New generation of processing environment October 2008 Jan Willems

2 Page 2 October 2008 Agenda Interoperability Functional solution Requirements Summary Internal settlement

3 Page 3 October 2008 …with quick time to market …in partnership with the best local providers …avoiding migration cost for the market Market developments drive service objectives for new generation lifecycle Friction-free service throughout full lifecycle Maximised control of cash and securities at any time Seamless interoperability to avoid fragmentation of liquidity Full integration of securities financing and asset servicing

4 Page 4 October 2008 Agenda Interoperability Summary Functional solution Requirements Internal settlement

5 Page 5 October 2008 Clearstreams existing processing environment Previous settlement engine was designed and deployed to achieve scale and optimisation Quality was evidenced in its night time efficiency, processing over 90% of the volume The old 15 batch daytime deployment leveraged our competence in optimisation Whilst delivering optimal efficiency, it reached its limits to meet evolving customer requirements Queuing times for feedback of internal, bridge and external settlement Suboptimal deadlines

6 Page 6 October 2008 The solution: proven settlement infrastructure with strong optimisation functionalities… The full set of settlement optimisation functionality is working in real-time from 04:30 to 18:00 CET Securities and cash nettingOptimises settlement efficiency and throughput Self-collateralisation on stock and flow Assists in the funding of own purchase Money Purchase Lien Supports higher trading velocity with less collateralised credit Fails lending Maximises settlement efficiency and reduces the risk of fails Sequencing Enables you to prioritise and control your settlement Provisioning Minimises domestic market turnaround times while recognising a collateral provision to support other settlement Automated collateral allocation and substitution engine Optimises use of securities as collateral for refinancing activities

7 Page 7 October 2008 …combined with end-to-end real-time instruction life cycle End-to-End fully ISO Instruction validation For internal instructions For domestic instructions* Real-time feedback on best matching allegement** 30 matching exchanges for Bridge instructions Release for provisioning during settlement window Customer query and SWIFT status on settled and pending transactions Cash balances and anticipated net balance projections Credit usage and collateral availability report 3 night-time processing (NTP) batches Optimised real- time daytime settlement processing from 04:30 to 18:00 CET ValidationMatchingProvisioning Input ISO Output ISO15022 Reporting Settlement * where the market infrastructure offers pre-matching ** for markets with binding matching Real-time processing

8 Page 8 October 2008 Why do we call it a new generation of processing environment and not just a settlement engine? Internal settlement Treasury & securities financing Domestic market and bridge interoperability Asset servicing …because life cycle performance drives the overall service portfolio Optimised real-time lifecycle

9 Page 9 October 2008 Agenda Interoperability Summary Functional solution Market trends and requirements Internal settlement

10 Page 10 October 2008 Extended daytime settlement from 4:30 to 18:00 CET in real-time and without any bottlenecks 5 minute turnaround for internal transactions Accelerated settlement without queuing times Improved settlement efficiency thanks to earlier feedback and better fails management Higher trading velocity supported by the same assets Unique combination of end-to-end real-time life cycle and optimisation deliver tangible benefits Increased Speed Permanent Optimisation Greater Efficiency Internal settlement

11 Page 11 October 2008 Agenda Interoperability Summary Functional solution Market trends and requirements Internal settlement

12 Page 12 October 2008 Investor / Intermediary All benefits of using local agents combined with ability to settle in multiple markets worldwide through single window Clearstream Local agent CSD Local agent CSD Local agent CSD 30 min turnaround time* Deadline objective: 15 min prior to local market deadline Single point for funding Single point for control * where local market infrastructure is real-time Value-added services Interoperability

13 Page 13 October 2008 * for against payment transactions only, time in CET Settlement deadlines in core European markets converging towards objective during H Market Old deadline* New deadline* Market deadline* AustriaSD 14:45SD 15:35SD 15:50 BelgiumSD 14:45SD 15:00SD 15:15 FranceSD 15:00SD 15:45SD 16:00 GermanySD 12:30SD 12:55SD 13:15 ItalySD 15:00SD 16:15SD 18:00 NetherlandsSD 15:30SD 15:45SD 16:00 SpainSD 12:45SD 14:10SD 15:00 Switzerland (CHF)SD 13:00SD 13:25SD 14:30 UK CrestSD 14:00SD 14:25SD In addition to the above markets, we are improving our settlement deadlines in 27 other markets and our cash deadlines for 26 currencies. Interoperability

14 Page 14 October 2008 Euroclear Bank The bridge has seen radical improvements in recent years Input deadline Bridge instructions, processing for value SD 20:30 * Input deadline times expressed in CET Input deadline Mandatory Bridge settlement 13:00 Input deadline Optional Bridge settlement (DVP) 15:00 Mandatory Settlement period Optional Settlement period Clearstream Banking 22:00 23:30 01:00 02:30 04:00 Input deadline Optional (FOP) 16: settlement exchanges between 06:00 and 18:00 Night-time processing SD-1SD Real-time day-time processing (04:30-18:00) Interoperability 05: settlement exchanges between 08:00 and 17:40 8 settlement exchanges between 08:00 and 16:00

15 Page 15 October 2008 Since July 2008Past Mandatory instruction deadline Optional instruction deadline Number of matching exchanges per day Number of settlement exchanges per day Continuous improvement of bridge interoperability - new milestone since July :30 14: per ICSD 13:00 Compared to internal deadline at EB of 13:30 and CBL of 14:00 15:00 (+ FOP deadline 16:00) 30 (almost every 15 minutes throughout day) 15 per ICSD Interoperability

16 Page 16 October 2008 The new Bridge: Changing your perception Daytime Bridge : an effective infrastructure for secondary market settlement Settlement efficiency rates over bridge are now equal to internal transactions Quality of ICSD settlement engines and number of instructions exchanges ensures that the most complex chains of transactions are always resolved To ensure that the Bridge is sufficiently robust to support evolving market needs, we need to maintain the pace of progress Joint effort with Euroclear to make continuous improvements to the infrastructure so we eliminate all bottlenecks Push for full interoperability Interoperability Future aim to maximise same-day financing and settlement possibilities and to introduce interoperability between the triparty repo systems of the ICSDs

17 Page 17 October 2008 Agenda Interoperability Functional solution Market trends and requirements Summary Internal settlement

18 Page 18 October 2008 Tangible benefits for you Lifecycle real-time from end-to-end (from instruction validation to reporting) without any bottlenecks Strong benefits for you through the integration of real-time processing and asset optimisation throughout the day time settlement period Maximised control and availability of cash and securities at any point of time, supporting greater level of trading activity Enhanced settlement efficiency Greater opportunity to re-use settlement results Less concentration of credit and collateral use Real-time interaction with securities financing, including substitution and auto-assign

19 Page 19 October 2008 The best model for interoperability, only limited by external factors but not by us All the benefits of using a local agent combined with the ability to settle in multiple markets worldwide through a single window Significant service level improvements for core markets in partnership with our domestic providers New processing infrastructure is ready for real-time, message-based bridge Solution is available now, at no migration cost and without any interface and processing changes

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