Friday, February 20, 2009

History of Euroclear

The Euroclear System

While several entities that are now part of the Euroclear group were established some years earlier, the Euroclear name came into existence in Brussels in 1968 with the creation of the Euroclear System. The System was set up with the aim of enhancing efficiency and minimising risk in settling transactions in USD eurobonds, a fast-growing international securities market. Incorporated under and subject to Belgian law, it was then part of Morgan Guaranty Trust Company of New York and the first International Central Securities Depository (ICSD) in the world.

The Euroclear System was designed largely to immobilise the transfer of physical securities and settle transactions through the simultaneous book-entry exchange of cash and securities. At that time, all processing took place manually, all instruments were still in physical form, and Euroclear was staffed by a mere 100 people.

Today, the Euroclear group has more than 3,000 employees and operates from offices all over the world.


In the early 1970s, the Euroclear System was sold to the market-owned company Euroclear Clearance System Plc, which Morgan Guaranty Trust continued to operate. Euroclear has been user owned ever since.

Developing a single access point

Euroclear progressively expanded its service offering to include links to domestic bond, equity and, later on, fund markets. More recently, we also developed products to manage derivatives exposures and settle transactions in emission rights.

Over the years, Euroclear has continually built on its core settlement and safekeeping function, offering extensive wholesale custody, securities lending and borrowing and collateral management services.

This expanded coverage has strengthened the role of the ICSD as a single access point to multiple markets and instruments.

Leading settlement consolidation in Europe

A major development came in 2000 when Euroclear Bank, an independent, user-owned and user-governed company, was launched to assume the operating and banking roles previously carried out by Morgan Guaranty Trust.

Euroclear has since been at the forefront of settlement infrastructure consolidation in Europe, as a means of helping our clients to benefit fully from the prospect of a single European financial market.

The first step was the outsourcing of the Irish government bond settlement activity by the Central Bank of Ireland to Euroclear Bank in 2000. There then followed an intense phase of mergers with European Central Securities Depositories (CSDs):

  • Euroclear France
    Joined Euroclear group: January 2001
    Established: 1949 as Sicovam

    Euroclear France is the CSD of France and is established under French law.

  • Euroclear Nederland
    Joined Euroclear group: May 2002
    Established: 1977 as Nederlands Centraal Instituut voor Giraal Effectenverkeer BV (NECIGEF)

    Euroclear Nederland is the CSD of The Netherlands. All securities transactions settled through Euroclear Nederland are subject to Dutch law and take place in compliance with the Securities Giro Act (Wet Giraal Effectenverkeer).

  • Euroclear UK & Ireland
    Joined Euroclear group: September 2002
    Established: 1993 as CRESTCo, start of operations in 1996

    Euroclear UK & Ireland is the CSD for UK securities and Irish equities. It is established as a Recognised Clearing House under the Financial Services and Markets Act and as Operator of the settlement system under the Uncertified Securities Regulations 2001 (as amended).

  • Euroclear Belgium
    Joined Euroclear group: January 2006
    Established: 1967 as Caisse Interprofessionnelle de Dépôts et de Virements de Titres (CIK)/Interprofessionele Effectendeposito- en Girokas

    Euroclear Belgium is the CSD for Belgium and is incorporated under and subject to Belgian law.

In January 2007, the fund order routing provider EMXCo also became part of the Euroclear group. Established in 1999, EMXCo operates the EMX Message System, which is the de-facto standard for mutual fund order routing in the United Kingdom. This is an important step in Euroclear’s strategy to improve the efficiency of both domestic and cross-border funds processing.

A new corporate structure

As a result of these mergers, the corporate structure of the Euroclear group was reorganised on 1 January 2005. The international CSD Euroclear Bank, formerly the parent company of the other entities of the group, became a sister company of these entities, and a new non-bank holding company called Euroclear SA/NV became the parent company of all the entities.

Delivering a domestic market for Europe

Euroclear is now implementing its Business Model to make cross-border settlement cheaper and more efficient, in order to help deliver a domestic market for Europe. Euroclear SA/NV is developing the group’s Single Platform which will deliver harmonised custody and settlement services for all its (I)CSDs.

Following intensive market-wide consultation, the first stage of Euroclear’s Single Platform, the Single Settlement Engine (SSE) was fully implemented in early 2007. The SSE consolidates settlement processing across the group entities and is the foundation for future integration.

In November 2007, Euroclear launched the first phase of Euroclear Settlement of Euronext-zone Securities (ESES). This will provide the Euronext-zone market CSDs (Euroclear Belgium, Euroclear France and Euroclear Nederland) with an integrated settlement solution and harmonised custody service for stock exchange and over-the-counter activities, and is an important intermediary step towards the Single Platform



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