The London Stock Exchange Group’s (LSEG) Luxembourg-based central securities depositary (CSD), globeSettle, has won a key regulatory approval and expects the green light from Europe’s securities authority in the coming days.
The approval of globeSettle makes it the third CSD to be recognized by the Banque central du Luxembourg as a securities settlement system, marking a decisive victory as it looks to go live on Europe’s incoming settlement system, TARGET2 Securities (T2S), through Monte Titoli, the LSEG-owned Italian CSD, in June this year.
“We have received authorization from the central bank of Luxembourg and formal notification through ESMA (European Securities and Markets Authority) is expected within the coming days,” says Andrea Tranquillini, general manager, globeSettle.
LSEG first announced plans to launch globeSettle in July 2013, in which it will use the infrastructure of Monte Titoli. In September 2014, it received regulatory approval to start operations.
globeSettle is currently in the process of onboarding J.P. Morgan, in which the bank will use globeSettle for settlement, custody and asset servicing for its international collateral management business.
“In 2015 we will continue to onboard J.P. Morgan, as well as LCH Clearnet, CC&G and CME Europe. We are also talking to a number of CCPs regarding globeSettle’s services,” adds Tranquillini. “At the moment, our focus remains the onboarding of J.P. Morgan.”
With the addition of globeSettle, the competitive landscape for Europe’s CSDs is becoming more open. In addition to the ICSDs operated by Euroclear and Clearstream, and also those owned by the LSEG, there is also BNY Mellon’s CSD and Spanish CSD Iberclear, as well as a number of regional CSD’s.
Despite the rise in CSDs, it is widely speculated that as settlement volumes and liquidity concentrate in only a handful of venues, it will most likely result in consolidation.
“We are likely to see a concentration of liquidity as a result of T2S and I expect to see a period of consolidation amongst CSDs over the next 5 – 10 years,” says Tranquillini.
Final Approval Of LSEG’S CSD Imminent
The London Stock Exchange Group’s (LSEG) Luxembourg-based central securities depositary (CSD), globeSettle, has won a key regulatory approval and expects the green light from Europe's securities authority in the coming days.