Euroclear Nederland is beginning the process of dematerialization in light of the Dutch Securities Giro Act (Wet giraal effectenverkeer), which took effect on January 1 and aims for full dematerialization in the Netherlands by the end of 2013.
Tenets of the act mean that:
– All Dutch securities currently in paper form that are held by Euroclear Nederland will be converted to either global notes (one immobilized certificate representing the entire security issue) or dematerialized securities after a two-year migration period;
– As of Jan. 1, 2011, Euroclear Nederland will no longer accept physical securities, other than global notes, within the Netherlands to deposit in its vaults;
– As of Jan. 1, 2011, Dutch issuers of new securities can only issue dematerialized securities (registered in the name of Euroclear Nederland) or as a global note to deposit with Euroclear Nederland; and
– As of Jan. 1, 2013, transfer of physical securities, other than global notes, will no longer be possible.
The process of securities dematerialization in the Netherlands has taken a giant leap forward in recent years, says Hugo Spanjer, member of the Euroclear Nederland management committee. For example, just 5 years ago, we estimated around 7 million physical securities were in our system. Today, that figure is approximately 400,000. As a result of the new legislation, it will be easier, less expensive and safer for Dutch issuers to raise capital and end investors to trade and own Dutch securities. For example, where fraudulent and stolen physical securities are a real market concern and cost, dematerialization will address these issues.
Ruud Sleenhoff, chairman of DACSI (the Dutch Advisory Committee Securities Industry), adds: It is of vital importance that our national authorities safeguard the soundness and competitiveness of the Dutch securities markets, which the new Securities Giro Act aims to achieve. The DACSI therefore supports this solid legislation that will strengthen securities ownership protection. It will apply to retail as well as institutional investors and, what is more, corporate issuers will benefit from cost efficiencies. An efficient marketplace benefits all participants and makes the Dutch market more attractive for issuers and investors in Europe and beyond.”