Euroclear Bank and Clearstream International today jointly announced the development of a new, automated, daytime Bridge between the two international central securities depositories (ICSDs). The ‘Bridge’ is an electronic communications link which facilitates the efficient settlement of securities transactions between counterparties in Clearstream Banking Luxembourg and Euroclear Bank. This new development will supplement the existing overnight electronic Bridge and will replace the manually operated daytime Bridge that currently links the two ICSDs. The automated daytime Bridge will substantially improve the existing infrastructure specifically by extending instruction deadlines, allowing same-day Bridge transactions. The launch timetable is targeted in two phases during 2004 to ease implementation.
Phase 1 of the upgrade, targeted for launch in June 2004, will improve settlement efficiency of Bridge transactions in general. Clients will be able to settle a wider range of securities transactions by being able to re-deliver securities from many more local markets across the Bridge during the day. The upgrade will also allow clients to reduce their financing costs by having more opportunities to settle Bridge transactions that failed during the overnight process. Also at this time, there will be a reduction in and better control of the risk exposure between the ICSDs for Bridge transactions.
Phase 2, targeted for launch in November 2004, will allow same-day settlement of trades over the Bridge, and in particular, repo and securities financing transactions between ICSD counterparties. This phase will extend Bridge instruction input deadlines into the daytime (from 20:30 the evening before settlement date to 13:30 on settlement date) and will provide the means for same-day distribution of new issues during the daytime over the Bridge. This phase will bring further cost and settlement efficiencies by enabling clients to repair previously unmatched instructions.
In order to provide immediate benefits to the market, the two ICSDs have also agreed to implement enhancements to the existing manually operated daytime Bridge. With effect from November 2003, the limit on the number of instructions that can be handled manually will be increased.
Instructions with a market value in excess of EUR 1,000,000 that have failed to settle during the overnight settlement process will be eligible for daytime delivery. In addition, new same-day instructions for transactions with a market value in excess of EUR 5,000,000 will also become eligible at that time.
Pierre Francotte, Chief Executive Officer, Euroclear Bank, commented: “This agreement confirms the ability of the two ICSDs to respond to market needs and collaborate closely on developments that increase efficiency and liquidity, and reduce risks for the market. Customers of both ICSDs will be better off for it.”
Andr Roelants, President and Chief Executive Officer, Clearstream International, added: “We are confident that the development and implementation of this automated daytime Bridge functionality will benefit our customers and the market in general. This agreement, once fully implemented, represents a valuable step on the road to our common goal of delivering further efficiencies and interoperability to the global capital markets.”