Euroclear Bank has launched a book-entry settlement service for Euronext Brussels equity trades.
The ICSD describes Brussels as the second Euronext market for which exchange members will have a choice of settlement location, following the launch of a similar Euroclear Bank service for Euronext Paris trades in July 2002. The Euronext Brussels service will complement the domestic-trade settlement service currently offered by CIK, the Belgian central securities depository (CSD) controlled by Euroclear.
Euroclear argues that, by consolidating their Euronext Brussels and Euronext Paris settlement activity in Euroclear Bank, clients that are not direct members of CIK or Euroclear France will be able to benefit from a reduction in settlement costs of “up to 90%.”
“This new service for Euronext Brussels trades is part of our strategy to progressively deliver centralized access for our clients to all European equity markets through their Euroclear Bank account,” says Pierre Francotte, Chief Executive Officer of Euroclear Bank. “Similar arrangements will be extended to trades on Euronext Amsterdam and the London Stock Exchange in the coming weeks. We believe this new service will bring greater liquidity to the Belgian equity market, as it will make it easier and much less costly for investors without a direct account in CIK to invest in companies such as Belgacom, which recently launched the largest initial public offering by a Belgian company in many years. Within a few weeks, Euroclear Bank clients will be able to settle stock exchange trades from the Euroclear group’s five key markets – Belgium, France, Ireland, the Netherlands and the UK.”
Euroclear adds that the new development is also a significant milestone in support of Euronext’s Single Order Book and LCH.Clearnet’s open architecture, which aim to offer their respective clients integrated trading, clearing and settlement services. Our mutual clients will have the opportunity to acquire meaningful efficiency gains and generate additional savings by rationalising their trade-processing supply chain.
All transactions in securities listed on Euronext Brussels, netted and guaranteed by LCH.Clearnet, will be eligible for the new Euroclear Bank stock exchange settlement service. Once Euronext Brussels trades are netted, LCH.Clearnet will transmit instructions on a straight-through basis to the settlement platform chosen by the trading counterparties or their clearing members. Book-entry, delivery-versus-payment, settlement will be offered in commercial bank money at Euroclear Bank and in central bank money at CIK.
The full range of Euroclear Bank services, including custody and tax services, settlement-integrated lending and borrowing, and collateral management, will be made available for Euronext Brussels listed securities.