E-MIG Workshop April 1, Prague

Transcription

1 E-MIG Workshop April 1, Prague 0

2 Agenda E-MIG Workshop Welcome and outline of meeting (Jaroslava Vlková, CSD Prague) Advantages European standardisation and harmonisation (Ben van der Velpen, ING) Break Market Standards Corporate Actions Processing and T2S (Christine Strandberg, SEB) Lunch Role of the CSD in general and implementation of standards (Edwin de Pauw, Euroclear) Break Advantages standardisation and harmonisation from a (Global) Custodian point of view (Mike Collier, Deutsche Bank) Round up of meeting (Jaroslava Vlková, CSD Prague) 1

3 E-MIG Workshop Prague Harmonisation & Standardisation in the Post Trade Environment within Europe Ben van der Velpen Network Management Senior Securities Market Consultant Prague,

4 Contents 1) Drivers for Harmonisation & Standardisation 2) Target 2 Securities (T2S) 3) Market Standards for Corporate Actions Processing (an example) 4) Governance/Approach 5) Where do we stand 3

5 Drivers for Harmonisation & Standardisation 4

6 European infrastructure MiFID II: Creation of MTFs MiFID: Cross exchange clearing T2S, MSCAP, MSGM: Cross border settlement, asset services Target 2: Cross border cash settlement 5

7 Drivers for Harmonisation & Standardisation Goal: Removing cross-border obstacles to create one efficient Single Market! Through: All kinds of standardisation & harmonisation initiatives like: - T2S, Market Standards for Corporate Action Processing, Market Standards for General Meetings, Harmonisation of the settlement cycle, Supported by: EU policies to promote the Single Market in financial services in general, so that crossborder investments activitities are encouraged and that the post-trade services providers are better able to support their customers in these activities 6

8 Drivers for Harmonisation & Standardisation Benefits of Harmonisation & Standardisation: Harmonised operations and processing rules across Europe Market Standards are based on existing or emerging best market practices More efficiency in processing (e.g. STP), hence less complexity Reduction of operational risks, hence increased stability of financial markets Reduction of cost throughout the value chain 7

9 Drivers for Harmonisation & Standardisation Enhance liquidity of Europe s capital markets Enhance investors participation in companies life, hence contribution to corporate governance (standards for general meetings) Benchmark for modern and competitive Europe s capital markets Domestic markets to be increasingly attractive for foreign investors All different initiatives contribute to the harmonisation of Europe s post-trade environment 8

10 Target 2 Securities 9

11 What is T2S? 10

12 Why T2S? - T2S will cut settlement costs to one of the lowest levels in the world. It will bring down cross-border settlement fees by fully exploiting the economies of scale resulting from the use of a single IT settlement platform, a single set of standards and a single operational framework. By enabling CSDs and banks to rationalise their internal processing and systems, moreover, T2S will also lead to a more general reduction of the total costs for settlement. - T2S will be a catalyst for harmonisation across Europe, helping to remove the current barriers and inefficiencies and to create a single, sound and competitive financial market in Europe, thus contributing to financial integration in Europe. - T2S will have a positive impact on financial stability, which is seen by the market as crucial in view of the recent financial turmoil. T2S will settle exclusively in central bank money and offer the most advanced standards of resiliency, availability, business continuity and security. It will significantly reduce the risks that still affect cross-border settlement today; it will enable banks to optimise their liquidity and collateral management; it will promote greater diversification and sharing of risk. - T2S will foster competition, open new business opportunities and ultimately benefit the European end-investors and issuers. T2S will thus have a positive impact on European economic growth in general. 11

13 Targets T2S Harmonisation Maximise settlement safety and efficiency Pursue cost reduction Optimise liquidity management Overcome national specificities (settlement) DVP mechanism in central bank money Deliver low settlement cost (cross border cost = domestic cost) Single collateral and liquidity pools accessible in realtime Catalyst for further harmonisation of asset servicing, tax and legal environment Cash and securities settlement integrated on the same IT platform Connected to wider Eurosystem infrastructure Reduce liquidity and collateral needs Increase competition and price transparency Easier collateral mobilisation Possibility of auto collateralisation 12

14 Migration into T2S 24 countries will/have to be compliant with standards in Q1 2017! 13

15 Market Standards for Corporate Actions Processing (an example) 14

16 Market Standards for Corporate Actions Processing Scope: - All types of corporate actions - All securities used for direct investments (equities, fixed income instruments) deposited and settled in Book Entry form with an (I)CSD in Europe; investment funds that are listed and traded on an exchange should be processed, where possible, in accordance with the Market Standards for Corporate Actions Processing - All parties involved i.e. issuers, market infrastructures, intermediaries and investors 15

17 C(hristmas) T(ree) M(odel) CA Information+Cash and/or Securities Issuer/Agent Mandatory events top down approach. If options available proceeds based at investor instructions. Issuer CSD CSD Participant Voluntary events bottom up approach for the individual investor but CA information is mandatory to all holders. Investor Etc. (if applicable) 16

18 Tool Box Distributions: Cash Securities Options (e.g. cash dividend, interest payment) (e.g. stock dividend, bonus issue) (e.g. optional dividend) Reorganisations: Mandatory Reorganisations with Options Mandatory Reorganisations Voluntary Reorganisations (e.g. conversion) (e.g. stock split, redemption) (e.g. tender offer) Transaction Management: Market Claims Transformations Buyer Protection (Distributions) (Reorganisations) (Elective Corporate Actions) 17

19 An example - Distributions Definition: Corporate Action whereby the Issuer of a security delivers particular proceeds to the holder of the Underlying Security without affecting the Underlying Security. 18

20 An Example: Sequence and defintions of dates Ex-date: The date from which trading occurs on the Underlying Security without the benefit / the right. (including exchange and OTC trading) Record-date: The date on which settled positions are struck at close of business to determine the parties who are entitled to associated Corporate Action benefits. Payment date: Key dates should be the The date on which the payment is due to be made. same in all markets! Minimum: 2 business days Settlement Cycle minus 1 business day (preferably) 1 business day 19

21 Governance/Approach 20

22 Responsibility MS given to the Private Sector CAJWG and JWGGM established to develop market standards Endorsement by the relevant European trade associations Responsibility for actual implementation resides at national level with the MIGs Steering, monitoring, coordination at European level Regular reporting to European regulatory authorities An all-inclusive process: issuers, market infrastructures for trading, clearing, settlement, intermediaries, investors 21

23 The Governance Structure Market Standards European Commission (+ ECB, ESMA) Expert pool General Meetings General Meetings European Broad Stakeholder Group (BSG) (EuropeanIssuers, ECSDA, EBF, EACB, ESBG, AFME, FESE, EACH, Euroshareholders*) European Market Implementation Group (E-MIG workshop) Corporate Actions Expert pool Corporate Actions National MIG Italy National MIG Belgium National MIG Czech Republic National MIG Poland National MIG Switzerland National MIG UK 22

24 Where do we stand 23

25 Consolidated 8 Major Markets September

26 Consolidated 9 CEE Markets September

27 Where do we stand Conclusions EMIG September 2014: System changes at CSD level are major contributors to achieve compliance with the standards in numerous markets; however, compliance of other constituencies (issuers, banks) in parallel is crucial. The proposed amendment to the Shareholder Rights Directive is deemed supportive of the implementation process in regard of end-to-end communication. Implementation plans on the timeline need to be realistic to provide for credibility. Access to basic documents (Market Standards for Corporate Actions Processing, Explanatory Memorandum, Q&A) via internet should be facilitated and the scope of published documents standardised. The increasing disparity of the state of implementation in European markets (see graphs in the previous slides) renders a change in the monitoring process advisable with a view to o maintain the momentum; o provide for a more focused approach o increase the efficiency and effectiveness. 26

28 Thanks for your attention. Any questions left? Tel: Next E-MIG with all markets 17/18 September Amsterdam 27