Clearstream has issued a statement “strongly” rejecting recent reports in the French media that it says misrepresent its activities. It adds that it regards all the allegations as false.
Clearstream says it has supported the investigations French authorities have conducted against third parties in the context of the so called “Affaire des Frgates.” None of the allegations are directed against Clearstream.
With reference to an anonymous letter accusing Clearstream of wrongdoing, the Luxembourg-based ICSD pointed out that the majority of accounts appearing in an extract of this letter published by a French publication on Thursday were not Clearstream accounts. “To the best of Clearstream’s knowledge the account numbers identify these as accounts held at other International Central Securities Depositories (ICSDs) or European Central Securities Depositories (CSDs),” says the statement. “Only authorized banks, supranational and government entities, brokers/financial institutions (provided that the institution is subject to regulation by an acceptable regulatory authority) and general corporates as tripartite repo cash providers are eligible customers of Clearstream. Individuals are not eligible as Clearstream Banking customers. Accounts are opened in the name of their legal owners. Each customer is free in asking for the opening of subsequent accounts. All main and subsequent accounts are subject to the same rules and internal control procedures and regulatory supervision. Some subsequent account names contain, beside the customer name, an indication as to third parties. These accounts are not opened for individual persons but on instruction of the legal owner of the account.”
Clearstream adds that banks in most countries do not generally publish their customers’ account numbers, due to banking secrecy and legitimate personal protection of customers. “Depending on the nature of the business executed through Clearstream, customers elect for their account numbers to be published or unpublished,” continues the statement.
“Customers may elect to provide other Clearstream customers with their respective account numbers to ease the settlement process, i.e. publish their account numbers. For other Clearstream services, e.g. the safekeeping of securities as well as the associated services, such as corporate actions on the deposited securities, customers do not need to publish their account numbers to other market participants.
This practice is entirely consistent with international banking industry standards. The non-publication of account numbers does not mean that these accounts are hidden or secret and unknown to Clearstream’s staff and management, the internal and external auditors and the regulatory authorities. To the contrary, all customer accounts, published and non-published, are all continually reviewed, monitored and reported to the regulators as needed.”
Clearstream says it maintains business relationships with CSDs across the world. This results in Clearstream holding accounts at other Central Securities depositories and vice versa. “In order to avoid errors in the identification of the counterparty, which would result in failed settlement instructions, Clearstream like most securities Settlement systems, maintains a list of reference numbers of counterparty accounts at CSDs abroad,” says the statement. “These counterparty references are defined and specified by the participants in the foreign market, but not by Clearstream. Clearstream merely maintains a list of these references in the interests of providing an effective service to its customers. The so-called `mirror account’ is only a half-understood description of the counterparty reference system maintained by security settlement systems throughout the world.”