UPDATE 1-European JV eyes lower cross-border settlement costs
April 2nd, 2008 | by admin |(moves dateline to MADRID, adds byline, quote, background)
By Jesus Aguado
MADRID, April 2 (Reuters) - A joint venture between sevenEuropean central securities depositories (CSDs) could slash thecosts of cross-border securities trading settlement and increasevolumes, representatives of the joint venture said on Wednesday.
The project called Link Up Markets has been in the works fortwo years and amounts to an industry response to calls from theEuropean Commission, the executive arm of the European Union,for lower transaction costs to boost the efficiency of Europe’scapital markets.
“We establish an environment that creates the potential toreduce current cross-border settlement costs by up to 80percent,” Jeffrey Tessler, head of Clearstream, the settlementand custody arm of German stock exchange operator DeutscheBoerse AG (DB1Gn.DE: Quote, Profile, Research), told a news conference.
The joint venture partners are Clearstream, Spain’sIBERCLEAR (BME.MC: Quote, Profile, Research), Hellenic Exchanges (EXCr.AT: Quote, Profile, Research) of Greece,Austria’s Oesterreichische Kontrollbank, SIS SegaInterSettle ofSwitzerland, Danish VP Securities Services and VPS of Norway.
Settlement is part of so-called post-trade services neededto execute the transfer of ownership and cash after a securitiestrade.
A Deutsche Boerse working paper published in 2005 putEuropean post-trade revenues at 17 billion euros ($26.6 billion)Trading volumes have risen considerably since, but transactionfees have fallen.
Link Up Markets, to be based in Madrid, is scheduled forlaunch in the first half of 2009, the joint-venture partnerssaid in a statement. Customers would benefit from a singleaccess to almost 50 percent of the European securities market.
