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Transcript of 15.10.2001 Page 2 European Exchanges, Clearing and Settlement in a Period of Change Dr. Heinrich...
15.10.2001Page 2
European Exchanges, Clearing and Settlement in a Period of Change
Dr. Heinrich Henckel
CEO SWX Swiss Exchange
Milano, 15 October 2001
15.10.2001Page 3
Overview
Introduction
Trends
The needs of market participants
Swiss Value Chain
virt-x
Clearing and Settlement
Outlook
15.10.2001Page 4
IntroductionEuropean markets – fragmented & slowly consolidating
More than 30 spot exchanges and over20 futures exchanges
EU harmonisation – Investment Services Directive – Introduction of the Euro
Trend from national to sectoral investmentsIncrease in crossborder (equity) trading, over 60% of which transacted in London
15.10.2001Page 5
Market environment: trends...
Trading beeing conducted electronically
Costs as a key competitive factor among market participants
Consolidation of market players (banks, securities dealers)
New competitors: – ECNs / ATSs – Securities dealers (brokers) are “internalising” order flows
Issuers: statutory domicile and listing drifting apart
15.10.2001Page 6
…and challenges for Exchanges
Differentiation along product lines is increasingly difficult
Dependency on a few very liquid securities
Market fees can be compared at a global level
The professional investor community thinks globally, whereasthe infrastructure is still organised locally
Exchanges vying for mermbers and products
Economies of scale - a must, also for exchanges and clearing & settlement organisations
15.10.2001Page 7
The Settlement Network TSNThe Settlement Network TSN ClearstreamClearstream
othermarkets(ICSD)
CrestCoCrestCo SISSIS
(CBF)(CBF)MTMT
BIt(IT)
BIt(IT)
EUR(BdF)
EUR(BdF)
EUR(LZBH)
EUR(LZBH)
EUR(BI)
EUR(BI)
GBP(BoE)
GBP(BoE)
EUR(CHAPS/
CBI)
EUR(CHAPS/
CBI)
CHF(SIC)
CHF(SIC)
EUR(euroSIC)
EUR(euroSIC)
TARGET
DTCCDTCC
Euroclear BankEuroclear Bank
(Sicovam)(Sicovam)
(BXS/CIK)(BXS/CIK) (Necigef)(Necigef)
EuroclearEuroclear (CBL)(CBL)
ClearnetClearnetCassaCassa
Othermarkets(ICSD)
SWX(CH)
SWX(CH)
LSE(UK)
LSE(UK)
Euronext(FR, BE, NL)
Euronext(FR, BE, NL)
DB(DE)
DB(DE)
virt-xvirt-x
Eurex Cl.Eurex Cl.
Trading
Clearing
Settlement
Othermarkets(ICSD)
Phase 1: bilateral settlement (without CCP)
LCHLCH
Clearing & SettlementEquities in Europe (Summer 2001)
15.10.2001Page 8
Needs of market participants as tosecurities trading systems
Internationally accessible trading platforms
Central order book
Uniform set of rules (on- and off-order book)
Robust and scalable technology
Integrated, transnational clearing & settlement
Transparency, anonymity
Low costs
LIQUIDITY
15.10.2001Page 9
InvestorsInvestors
Banks & Brokers
Banks & Brokers
SWX Swiss Exchange – Trading Platform
SWXPlatform
SWXPlatform
SIS SEGAINTERSETTLE AG – Clearing and Settlement
SIS/x-clearSECOM
SIS/x-clearSECOM
SIC AG– Payments Systems
SIC/SNBSIC
SIC/SNBSIC
SIC/SECBeuroSIC
SIC/SECBeuroSIC
The Swiss Value ChainReality today
Simultaneous, final, irrevocable delivery versus payment is the Swiss reality
Trading, clearing and settlement fully integrated
Significant reduction inback office costs
Open access, also for remote participants
Competitive transaction costs throughout value chain
High degree of automation: enables Internet access
15.10.2001Page 10
SWX/virt-x Platform
SWX/virt-x Platform
SIS/x-clearSECOM
SIS/x-clearSECOM
SIC/SNBSIC
SIC/SNBSIC
SIC/SECBeuroSIC
SIC/SECBeuroSIC
The Swiss Value ChainThe European Dimension
Fully multi-currency Robust, scalable platform On and off order book
trading Full range of instruments
(equities, bonds, derivatives)
Fully-integrated clearing & settlement instructions
virt-x exchange organisation established in UK
Fully multi-currency Robust, scalable platform On and off order book
trading Full range of instruments
(equities, bonds, derivatives)
Fully-integrated clearing & settlement instructions
virt-x exchange organisation established in UK
Fully multi-currency Robust, scalable
platform Full range of
instrument including repos
Automated DVP links to CRESTCo (UK), Euroclear (ICSD), Clearstream Luxembourg (ICSD) and Clearstream Frankfurt (DE)
Fully multi-currency Robust, scalable
platform Full range of
instrument including repos
Automated DVP links to CRESTCo (UK), Euroclear (ICSD), Clearstream Luxembourg (ICSD) and Clearstream Frankfurt (DE)
RTGS system
SNB (CHF) SECB (EUR)
based in DE euroSIC fully
integrated with TARGET (EU) and RTGS+ Systems (DE)
RTGS system
SNB (CHF) SECB (EUR)
based in DE euroSIC fully
integrated with TARGET (EU) and RTGS+ Systems (DE)
15.10.2001Page 11
virt-x MembersSeptember 2001 (Total 115)
Swiss (66)
UK (33)
Germany (8)
France (3)
Others (5)
15.10.2001Page 12
virt-x TurnoverSince launch
0
1'000
2'000
3'000
4'000
5'000
6'000
7'00025
.06.
01
02.0
7.01
09.0
7.01
16.0
7.01
23.0
7.01
30.0
7.01
06.0
8.01
13.0
8.01
20.0
8.01
27.0
8.01
03.0
9.01
10.0
9.01
17.0
9.01
24.0
9.01
Turnover in mio EUR
15.10.2001Page 13
virt-x Market ShareTurnover of European Indices
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Date
Per
cen
tag
eDow Jones STOXX 50
MSCI Pan European
FTSE Eurotop 300
Dow Jones EuroSTOXX 600
15.10.2001Page 14
GCMsGCMs
GCMs GCMs
Trading
Clearing
Settlement CrestCrestSISSIS EuroclearEuroclear
Central counterpartyRisk management AnonymitySettlement assuranceConcentrator for netting
Exchange matched trades sent for clearing & settlement
Member choice ofsettlement venue
x-clearLCH
virt-x
virt-x Clearing & SettlementPhase 2 Model