Clearstream eyes emerging markets push through new deals

Clearstream recently signed two key emerging market sub-custodian deals, one in Romania and the other in Colombia.

By Joe Parsons

Clearstream has stepped up its drive into emerging markets through a number of new sub-custodian deals, and is working with government departments to bring these countries into its international network.

Last week, Clearstream signed two key sub-custodian deals, one in Romania with Societe Generale Securities Services and the other in Colombia with BNP Paribas Securities Services.

It also extended its clearing, custody and settlement services in the Georgian market to include corporate bonds last month, and in July onboarded Kazakhstan to its network.

Phil Brown, co-CEO of Clearstream Banking, explained they have been working with local central securities depositories (CSDs), central banks, the Ministries of Finance, and local sub-custodian partners to bring these markets closer to international investors.

“The idea is to bring local emerging debt into the ICSD model,” Brown said. “Clearstream is connecting international investors with emerging market debt issuers in these countries, and furthermore helping these markets rapidly improve their infrastructure ensure acceptability by the wider international investment community.”

Brown added Clearstream’s Investor CSD model for TARGET2 Securities (T2S), the pan-European settlement platform, has also seen a pick-up in activity and expects this to increase after the go-live of the Danish Krona as a T2S settlement currency.

Earlier this month, Clearstream established a third-party link for Belgium’s NBB eligible securities onto its Investor CSD solution, and will soon extend this to Austria.

Brown believes through these Investor CSD links, Clearstream is helping to maintain the sub-custodian model, despite initial concerns the T2S platform could disintermediate local settlement banks.

“We employ a local asset servicer in each market, who carries out the asset servicing function on a custody account that we maintain in our name at the CSD,” added Brown.

“Other CSDs and ICSDs seem to be taking a different approach and disintermediating the sub-custodians – we think our solution is unique.”