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Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas PowerPoint Presentation
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EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 ________________________________________________. Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas.

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Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas


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EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010________________________________________________

Notes from Vivien Levy-Garboua,

Senior Advisor at the Directorate General of BNP Paribas

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EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010________________________________________________

  • Exchanges are much more competitive than they used to be

need for a stable ground on which to rely. We cannot have complexity at all levels.

Hence the importance of a stable framework for post trade infrastructures.

  • Post trade = CCP’s(+TR) EMIR
          • CSD’s New directive « announced » for 2011

There is a need for such a directive on CSD’s

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EMIR / CCP’s – EMIR goes in the right direction

  • CCP’s are of a systemic nature
  • Safety /efficiency trade off. There is no trade off – The risk part is not negociable, it can not be a « risk return » type of choice.
  • The Risk Management tool of a CCP is crucial. CCP’s take counterparty risk.
  • CCP’s should be regulated
  • Access to CB money intra-day / over night CCP’s should be banks

CCP’s should be linked to their monetary zone

  • Interoperability must not be done at the expense of the risk taken

A CCP must be able to refuse to deal with another CCP

n>2 is very different from n=2 when you speak of interoperability

  • There will be a need for consolidation, on a regional basis
  • Intragroup transactions should not be obliged to go through a CCP : when my AM works with FI its BNP vs BNP

EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________

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CSD’s

EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________

Role n°1 : Notarial vote / Regalian Role / Central Banks for Securities.

  • Relation with issuers
  • Creation of dematerialized securities in its systems
  • Registration of the Securities
  • Control of the integrity : Supply = Demand in number of shares+ Sometimes :
  • Information on the life of the share (elementary Corporate Action)
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CSD’s

Role n°2 : Settlement / DVP

EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________

  • DVP in CB money – Guarantee this process
  • Enable the circulation of securities
  • Guarantee the existence of securities and cash
  • + Sometimes :
  • A technical role in the lending / borrowing of securities without taking any counterparty risk. Only operational risk

A CSD should not take any liquidity risk / counterparty risk – Only operational risk.

The new Directive (i) should regulate this part which is « Public utility » / not for profit / Central Bank for Securities (ii) should define the conditions under which a CSD can develop other « non regalian » activities.