Euroclear, the Brussels-based International Central Securities Depositary, says its long-awaited Single Settlement Engine (SSE) was completed at the end of January when Euroclear Bank itself moved on to the SSE.
Euroclear says the SSE is the “first major milestone” in its long march towards a consolidated processing platform, merging five Euroclear group settlement platforms into one. The SSE was launched on Euroclear France on 29 May 2006, followed by CRESTCo on 28 August 2006.
As a result of enhanced internal testing and two dress-rehearsals executed prior to the launch, only very minor disruptions to the availability of Euroclear Bank’s client reporting occurred during the launch weekend, says Euroclear. It adds that a level of difficulty was expected, given “the size and complexity of the project.”
The SSE is the platform that carries out the core function of securities settlement including the positioning and booking of cash and securities transfers. It is therefore the foundation onto which all IT systems within the Euroclear group will eventually be consolidated.
Euroclear says a new settlement-optimisation processing module has been introduced with the SSE, offering technical netting of cash and securities positions. It claims the new feature has already increased settlement efficiency in Euroclear France and CRESTCo, particularly for back-to-back transactions, and reduced the need for securities borrowing to avoid settlement failures.
“Thanks to the hard work and expertise of our people, along with the support of our clients, delivery of the settlement-infrastructure foundation for a ‘domestic market for Europe’ is now a big step closer,” says Pierre Francotte, CEO, Euroclear SA/NV. “We are now more than half way through our platform consolidation and market harmonisation programme, removing key Giovannini Group barriers within the Euroclear group markets. We are already well advanced in testing the next major phase in our programme, which will be launched later this year,” he adds.
The next step in Euroclear’s migration to a single platform is the launch of Euroclear Settlement for Euronext-zone Securities (ESES). Using the SSE as its foundation, ESES aims to serve as a single processing service to process both domestic and cross-border fixed-income and equity transactions in the Belgian, Dutch and French markets as if they were a single market. ESES will be launched in Euroclear France at the end of this year and in Euroclear Belgium and Euroclear Nederland in the second quarter of 2008.
Once that is in place, Euroclear will then enter the final phase of consolidation onto the single platform serving all Euroclear group markets. Starting with custody-related processing in late 2008, all components of the single platform are scheduled to be completed in 2009/2010.