New service offering to clear a wide selection of Europe’s depositary receipts and provide most convenient settlement location
European Central Counterparty (EuroCCP) has announced that it will commence clearing and settling 120 of the heavily-traded listed depositary receipts from October 16, 2009.
Reportedly, with its new central counterparty service offering, EuroCCP extends to depositary receipts transactions and counterparty risk protection benefits to clients’ equities transactions. Additionally, EuroCCP has appointed Citi’s global transaction services as its settlement agent for these instruments.
EuroCCP has said that in addition to clearing a wide selection of depositary receipts in Europe, its service will stand out by providing a convenient settlement location. Initially all transactions will settle at Euroclear Bank. Some ISINs are eligible both at Euroclear Bank and the Depository Trust Company (DTC) and, for these, after the initial period, the settlement location will be determined at the ISIN level at the one location –either Euroclear Bank or DTC. EuroCCP has added that this approach is expected to facilitate customers’ position management, limit customers’ need for cross-border realignments, and help to reduce overall processing costs.
EuroCCP has further added that Turquoise will be the multilateral trading facility (MTF) to offer trading in depositary receipts cleared through EuroCCP. Virtually all of these issues are priced in US dollars.
James Cressy, head of operations at EuroCCP, said: “Diversification of the instruments covered by EuroCCP clearing and settlement offers new levels of safety to the markets by extending our central counterparty clearing to a new category of securities. There was clear market interest in the EuroCCP Depositary Receipts service offering, and we worked in close cooperation with our users to develop it.”
Tom Isaac, global head of client & sales management for financial intermediaries at Citi, said: “Citi is extremely pleased to continue to build its relationship with EuroCCP to include the settlement of depositary receipts. This appointment reflects Citi’s ongoing commitment and ability to support the needs of central counterparties in this region.”