Euroclear's Initiative for a Unified Post-Trade Infrastructure
In a significant move for European financial markets, Euroclear has announced a comprehensive strategy aimed at establishing a unified post-trade infrastructure that connects all 27 EU markets across various financial asset classes. This initiative not only seeks to enhance efficiency in the post-trade process but also aims to transform Europe into the premier destination for investors and issuers worldwide.
The plan underscores Euroclear's commitment to support the Savings and Investments Union's (SIU) objectives, paving the way for a truly integrated capital market in the region. At its core, the initiative will leverage Euroclear's substantial resources, combining the strengths of its main Central Securities Depository (CSD) with six local CSDs throughout Europe. This unique combination positions Euroclear as a crucial gateway linking global markets while promoting innovation and efficiency in the financial ecosystem.
Benefits of the Initiative
The ambitious project promises several noteworthy benefits. First, it will ensure seamless connectivity within the single market, which is essential for competition and market stability. By maximizing accessibility, Euroclear plans to drive innovation in financial services and accelerate the adoption of new technologies in the post-trade arena.
Euroclear aims to provide a single point of access to all Member States for various financial assets, including equities, fixed income, and alternative funds. This access will be enhanced through two key offerings:
1.
Central Bank Money Access: Euroclear will speed up its connection to the European Central Bank's Target2-Securities (T2S) platform, enabling access to all EU CSDs using central bank money.
2.
Integrated Services: A focus on synergies between local CSDs and Euroclear Bank will enhance service efficiency, improving the overall experience for users.
By integrating these services, Euroclear will facilitate a pan-European infrastructure that empowers issuers to tap into a wide investor base while enjoying deep liquidity and cost-effective services. This will be crucial in cultivating robust post-trade systems to facilitate retail and institutional investments in diverse products.
Implementation Timeline
To realize these ambitious goals, Euroclear aims to complete the commercial bank money access to all EU Member States by 2026. Following this milestone, Euroclear will then focus on establishing Central Bank Money access through its connection to T2S.
Valérie Urbain, CEO of Euroclear, emphasized the importance of fostering an open and interconnected marketplace to enhance liquidity in capital markets. “By maximizing user options and keeping markets competitive,” she highlighted, “we can ensure European markets flourish on the global stage.”
Euroclear's Role in the European Financial Landscape
As the largest CSD group in Europe, Euroclear has played a critical role in financing the European economy, holding over 50% of securities issued in the EU. Current estimates suggest that over 60% of EU settlement turnover occurs through Euroclear's platforms, demonstrating its integral position in the financial infrastructure.
In support of these initiatives, Euroclear has also outlined several policy recommendations aimed at bolstering regulatory frameworks and enhancing market access. Some recommendations include:
- - Simplifying regulatory frameworks to enable better integration of financial market infrastructures.
- - Strengthening legal and regulatory convergence to support smoother cross-border operations.
- - Promoting the advancement of digital asset infrastructures to meet evolving market needs.
By calling for these changes, Euroclear aspires to not only boost its own operational efficiency but to also herald a new era of stability and integration for European financial markets.
In conclusion, Euroclear's strategic plan to unify the post-trade services across EU markets marks a pivotal moment for the financial sector in Europe. It promises to streamline operations, promote investor confidence, and foster a competitive and dynamic environment suitable for the future of investing.
Whether you are an investor, an issuer, or a market participant, this initiative by Euroclear will likely benefit a vast array of stakeholders, enhancing the landscape of capital markets in Europe and beyond.