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The Code and T2S - The view from Euroclear

The Code and T2S - The view from Euroclear. Paul Symons Head of Public Affairs, Euroclear January 2008. Euroclear’s view of T2S …. We share the ECB’s vision of an integrated European Capital Market This drives our business model Producing client savings of €300 mn a year

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The Code and T2S - The view from Euroclear

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  1. The Code and T2S - The view from Euroclear Paul Symons Head of Public Affairs, Euroclear January 2008

  2. Euroclear’s view of T2S … • We share the ECB’s vision of an integrated European Capital Market • This drives our business model • Producing client savings of €300 mn a year • Euroclear is neither for, nor against, T2S • We are constructive … • … but questioning … • … and the pace set by the ECB means that questions need to be answered quickly …

  3. … many complex unanswered questions • Can CSDs really downsize their systems? • Can CSDs outsource settlement? • With whom will CSDs contract? • Does direct connectivity make economic sense? • How extensive will harmonisation be? • Is the project economically feasible? • And do we believe settlement should be commoditised AND public sector owned?

  4. Euroclear’s views of the Code … • A pragmatic and sensible alternative to regulation … • … and delivering benefits quicker than regulation ! • Transparency • All (I)CSD fees publicly available • … and conversion tables an aid to price comparability • Access and Interoperability (A&IO) • Guidelines are a public ‘rule’ book • And have been a catalyst in identifying further ‘Giovannini’ barriers • Unbundling and Accounting Segregation • Implemented by (I)CSDs • Ready to submit data to regulators when required

  5. … also some open questions here • When should we declare the Code a success? • How long should we give the A&IO requests to deliver? • How should compliance be monitored in the long term? • Should the Code be extended? • To all equity business and all players in the market? • MTFs? • To other securities and products • Bonds? • Derivatives? • Funds? • Lessons for the future of regulation?

  6. T2S and the Code – Common themes? • Both aim to increase competition • T2S through commoditising settlement … • The Code through making settlement competitive … ! • Both look at CSDs as “quasi-monopolies” • The Code uses traditional liberalising measures … • T2S sees settlement as a commodity and wants CSDs to compete for custody services • How realistic is this? • And what market impact will it have? • CSDs and their service offerings will change European Settlement landscape is changing extremely quickly

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