Clearstream and Euroclear Bank set higher standards for international securities

JOINT PRESS RELEASE * Launch of a new industry framework developed in collaboration with the International Securities Market Advisory Group * BNP Paribas Securities Services, Citibank N.A. Issuer Services, European Investment Bank and KfW as early supporters of the initiative and the associated best practice implementation process * Reducing inefficiencies, costs and risks in issuing and servicing international securities while increasing transparency on service quality and market performance

Clearstream: Euroclear Bank and Clearstream, the international central securities depositories (ICSDs), have developed jointly and in collaboration with the International Securities Market Advisory Group (ISMAG), a new industry framework to increase transparency and efficiency for the issuance and asset servicing of international securities. The framework sets standards for these securities issued in and primarily deposited with the ICSDs, with outstanding levels close to €9 trillion. Major issuers and industry participants like BNP Paribas Securities Services, Citibank N.A. Issuer Services, European Investment Bank and KfW are supporting the initiative and the associated best practice implementation process.

International securities issuance is becoming more complex, with increasing challenges to reconcile legal and operational requirements. The new international securities standards are the result of a three-year programme led under the auspices of ISMAG to identify and encourage best practices in issuance and asset servicing operations throughout the entire value chain. ISMAG’s recommendations aim to reduce the inefficiencies, costs and risks in issuing and servicing securities while increasing transparency on the use of the new standards for the benefit of the issuer and investor communities. The ICSDs, following a detailed consultation process with market experts, have documented the best practices of some “best in class” parties for operational processes related to new issues, corporate actions and income, and made them available in the form of recommendations in the International Securities Operational “Market Practice Book” (MPB) to promote wider implementation in a cooperative dialogue with the market.

John Gubert, Chairman of ISMAG, said: “The regulatory developments since the financial crisis call for more transparency and accountability in the market. Likewise, investors have growing expectations in terms of service quality levels. Greater operational clarity, improved end-to-end communication between parties in the value chain, and higher operational efficiency, driven by ISMAG, will translate into increased performance levels and reduced processing risks for the industry. The recommendations for best market practices are now final. The focus is on increasing awareness and implementation of the new standards as well as changes in behaviour by all relevant parties, including issuers, their agents and the legal community.”

Issuers and agents can adhere voluntarily to the relevant recommendations in connection with all, or some, categories of securities by signing letters of representation that are part of the MPB. Compliant securities will be awarded the ISMAG Adherence Label. Accordingly, securities and institutions that earn the label will be published by Clearstream and Euroclear Bank, whose customers will benefit from increased transparency and visibility of the issuers and agents adhering to the framework.

ISMAG, composed of representatives from many institutions and trade associations, will continue to meet on a regular basis to oversee the implementation of the standards and to consider any future enhancements to the new framework.


About ISMAG

The International Securities Market Advisory Group (ISMAG) is a senior market committee launched in June 2007 by the ICSDs, Euroclear Bank and Clearstream Banking Luxembourg, and a number of major market participants, including trade associations such as AGC (Association of Global Custodians), ICMA (International Capital Market Association) and ICMSA (International Capital Markets Services Association). Its main aims are to achieve a high level of standardisation and efficiency in the issuance and core asset servicing for international securities primarily issued and deposited with the ICSDs, and to maintain market attractiveness and competitiveness for international securities issuers and investors alike.


About Clearstream

As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 51 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in over 110 countries. Its services include the issuance, settlement and custody of securities as well as investment fund services and global securities financing. With more than €11.3 trillion in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry, offering access to a growing number of markets in Europe.


About Euroclear Bank

Euroclear Bank provides settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds. Serving major financial institutions located in more than 90 countries, Euroclear Bank, based in Brussels, is part of the Euroclear group. Euroclear Bank is rated AA + by Standard & Poor’s and Fitch Ratings.

The Euroclear group also includes Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. In addition, Euroclear owns Xtrakter, operator of the TRAX trade matching and reporting system. In 2010, the Euroclear group settled more than €526 trillion in securities transactions, representing 150 million domestic and cross-border transactions, and held nearly
€22 trillion in assets for clients.