Anyone who thought the acquisition of CREST by Euroclear had killed off the relationship between the IUK CSD and its Swiss equivalent – SIS Sega Intersettle – needs to think again. Today, SIS and CREST announced a joint plan to “revolutionise securities business between Switzerland and the UK.”
SIS and CREST have had a real-time electronic link between their two systems on a free of payment basis since August 1999. Trouble is, hardly anybody uses it. So the options it provides are being enhanced. The enhancements to the existing link introduce full Delivery-Versus-Payment (DVP) for all cross-border transfers of UK, Irish or Swiss securities against euros, sterling or US dollar payments. This means that securities firms which are members of CREST or SIS will be able to move securities against payment between SIS and CREST with full finality of stock and cash in real-time throughout the day.
Since June 2001, when virt-x was launched, it has been possible to settle all shares traded on the would-be pan-European exchange (though virt-x is really no more than a market for Swiss blue chips) through SIS for just CHF 0.40 – irrespective of whether the counterparties settle their trades at CRESTCo or Euroclear. From Monday this week, off-exchange (OTC) transaction between Switzerland and the UK can equally be settled via the link between SIS and CRESTCo against British pounds, Euros and US dollars. Settlement is effected on a delivery versus payment (DVP) basis.
“The extension of this link enables SIS clients to achieve savings of approximately 70 per cent of settlement costs for cross-border trades between Switzerland and the UK,” explains SIS. “Thanks to the expansion of their interlinked realtime systems, CRESTCo and SIS SegaInterSettle, both service providers for the securities industry, simplify the settlement of crossborder transactions … By realising this project, both companies have taken an important step towards their joint aim of simplifying crossborder securities trading while significantly reducing the associated costs. This allows clients of SIS and CRESTCo to have their on-exchange or off-exchange transactions settled via the link, either by SIS or CRESTCo, in a secure, efficient and cost-effective way.”
Dick Newman, Head of Settlement Services at CRESTCo, adds: “The introduction of full cross-border DVP between CREST and SIS is a major step to making cross-border transactions as efficient and risk-free as domestic transfers.”