Euroclear, the European settlement services provider, has signed a ‘Memorandum of Understanding’ to acquire the Nordic Central Securities Depository (NCSD) from Nordea, SEB, Svenska Handelsbanken and Swedbank.
NCSD, which comprises the Finnish and Swedish CSDs, Suomen Arvopaperikeskus Oy and VPC AB, will merge with Euroclear in the fourth quarter of 2008, subject to regulatory approvals.
With Euroclear already providing securities settlement services in France, Belgium, the Netherlands, UK and Ireland, the acquisition offers the prospect of greater harmonisation of post-trade processes in the European financial markets. Currently, the cost of clearing and settlement in the European equities markets is regarded as considerably higher than the US, where post-trade services are provided by a single utility, the Depository Trust & Clearing Corporation (DTCC).
Following the merger, Euroclear group CSDs will represent approximately 65% of the Eurotop 300 equity markets. Including Euroclear Bank, the group’s international CSD, Euroclear will represent approximately 50% of all European domestic debt outstanding.
Sir Nigel Wicks, chairman of Euroclear, said, “Our shared goal is to reduce end-user costs for domestic and cross-border transactions based on harmonised market practices on a single processing platform. The agreement with NCSD demonstrates continued user- and market-led momentum for infrastructure reform that aims to achieve a more efficient, low-cost settlement environment in Europe.”
A statement from SEB said, “Fragmentation of the post-trade infrastructure has been defined as one of the major obstacles in order to achieve efficiency in all parts of the investment chain and lowering cost is a major driving force in the post-trade area. With NCSD becoming part of a group of like-minded CSDs that will provide a seamless post-trade environment between markets and we believe that the Nordic market will become even stronger.”
Euroclear is in the process of introducing its Single Platform, an integrated post-trade processing platform for settling domestic and cross-border transactions involving securities issued in its core markets, as well as the international securities markets served by Euroclear Bank.