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AMEDA Leadership Forum Alexandria, 29 January 2009.

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Presentation on theme: "AMEDA Leadership Forum Alexandria, 29 January 2009."— Presentation transcript:

1 AMEDA Leadership Forum Alexandria, 29 January 2009

2 State of the Region* -2- * Plug types in use

3 Joint Venture partners Eight leading European CSDs -3- Link Up Markets 50 % market share in settlement volumes and 45 % in asset holdings in Europe

4 -4- ‘Lisbon Agenda’ / ‘Financial Service Act’: Demand for integration of financial markets in Europe until 2010 to promote cross-border activities Improves efficiency Facilitates interoperability Increases choice Drives harmonisation Link Up Markets TARGET2-Cash Code of Conduct TARGET2- Securities Removal of Giovannini Barriers MiFID Facilitates integration of European financial markets immediately Answer to changing environment in Europe

5 -5- Efficiency through interoperability DIRECT CROSS-BORDER ACCESS via local CSD infrastructure Link Up Markets Other CSDs  Single point of access to 7 participating markets  Settlement in Central Bank Money leveraging TARGET2-Cash  Best-in-class CSD services for all asset classes  Reuse of efficient local CSD- infrastructures  Absorbing differences in market standards  Extension of market coverage worldwide  Launch in 1st half 2009 Today Future Other CSDs

6 Converting and enriching data Link Up Markets infrastructure “CONVERTER” CSD1 IN MT543 Data 2 Data 1 Data 3 MT543 Data 4 Data 1 Data 2 Data 3 CSD2 OUT MT543 Data 3 Data 1 Data 2 Data 4 CSD 1 e.g. Investor CSD (sender) MT543 Data 2 Data 1 Data 3 CSD Internal Systems Sending CSD may use proprietary format CSD may have CSD-specific usage CSD defines mapping rules Sending CSD may need to send additional information for receiving CSD MT543 Data 3 Data 1 Data 2 Data 4 Mapping Rules CSD Internal Systems CSD 2 e.g. Issuer CSD (receiver) Format Conversion, Transformation & Enrichment CSD1 IN CSD2 OUT Format Conversion, Transformation & Enrichment Converter Format Receiving CSD may use proprietary format CSD may have CSD-specific usage CSD defines mapping rules Receiving CSD free to transform CSD2OUT for further use by internal systems -6-  Definition of common format (“converter format”) per message type  Each CSD maps inbound and outbound formats against converter format.  Converter might introduce additional translation logic, e.g. inserting particular attributes specific to the outgoing format  Individual mapping rules not impacted by changes in other markets and addition of new markets

7 -7- Link Up Markets CSD 6 CSD 4 CSD 3 CSD 5 CSD 1 ? CSD 7 CSD 2 Domestic client Domestic format Domestic client Investor CSD: Settlement on accounts in each Issuer CSD (omnibus or segregated) Handling of corporate actions, income payments and tax services on individual customer accounts Issuer CSD: Settlement on Investor CSD accounts Support to Investor CSD for corporate actions, income payments and tax services Support to Investor CSD for market specific services Client: Single account relation with Investor CSD Use existing systems/interfaces Cross-border DvP settlement Payment via Target 2 or cash correspondent An example Domestic format

8 Drivers for cost reduction FeaturesBenefits for market participants Direct access to 7 markets via one single, familiar gateway  No changes to the current set-up  Rationalisation of links into 7 different markets  Unbundling of services with significant fee saving potential*  Cross-border settlement fees  Safekeeping fees for non-domestic assets Consolidation of liquidity and custody pools across all participating markets Increased liquidity pool allowing for greater securities financing and collateral management product usage Depository consolidationGreater scale and price advantage with preferred CSD gateway * Pricing at discretion of each CSD -8-

9 -9-  Common format based on ISO message types  Incentive for conversion towards common format  Introduction of message formats in Greece  Introduction of MT56x in Spain  Decoupling of format interdependencies between markets  Implementation of standardized link agreements between Link Up Markets CSDs based on ECSDA template  As little room as necessary for bilateral agreements  Issuer CSDs deliver consistent service scope and quality to Investor CSDs  Existing service gaps to be closed standalone or with support of partners Driving harmonisation Message harmonisation Service harmonisation Link harmonisation

10 Business opportunities for CSDs -10- Issuer CSD Attract domestic securities from cross- border investors Investor CSD Provide cross-border services to domestic investors CSD

11 -11- Business opportunities as an Issuer CSD  Become counterparty of foreign Investor CSD  Expansion of customer base  Direct holdings at lower scale  Attract more inflow by providing efficient services  “As close to market as possible”  Upgrade of existing CSD links to full service  Participate in market harmonization efforts  Position yourself as gateway into the region  Own domestic market  Single window into own regional network Issuer CSD

12 -12- Business opportunities as an Investor CSD  Transform business model to become specialised custodian for outbound business  Diversify services  Generate new revenue stream  Build cross-border capabilities in-house  Streamline existing cross-border business  Direct access to markets at domestic CSD cost  Simplify setup and maintenance of links  Harmonization as a result rather than a pre-requisite  Access 50% of European market via single technical link Investor CSD

13 Implementation plan st Release Window2 nd Release Window3 rd Release Window 30 Mar 2009End of Jun 2009Nov 2009  CBF  OeKB  SIS  VP  Helex  Iberclear  VPS  CSE CSDs Functionality  Launch of common infrastructure with full functionality  SWIFT connectivity

14 -14- Outlook Current focus  Extend market coverage – in Europe and beyond  Shift focus towards asset servicing  Enhance service scope, potentially in co-operation with non-CSD partners  Leverage infrastructure, e.g. interface to Eurosystem applications  8 markets representing 50% of European securities processing volume  Format conversion for settlement messages  Best-in-class CSD services Potential future extensions


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