Clearstream Moves Towards 24-Hr Processing

Terry Flanagan

Arnaud Delestienne, head of core product at Clearstream, said the international central securities depository’s US expansion is part of its move towards processing 24 hours a day, seven days a week.

Clearstream, which is owned by German exchange operator Deutsche Börse, said in a statement last month that from April this year, it will extend US settlement for securities and cash by two hours to 14:00 EST.

Delestienne told Markets Media that the first phase of expansion in April will involve limited change to Clearstream’s systems with compression of their end of day files improving processing by two hours. “Phase II will involve upgrades to our platform while the last phase will involve a significant redesign and some changes to our interoperability with external providers, ” he added.

Next year the deadlines will be extended to 15:30 EST with settlement throughout the entire US business day planned in 2016.

“We are developing and adapting our infrastructure for the next generation of ICSD services so that in 10 years time we can operate on a truly global basis,” he said. “We are moving towards processing on a 24/7 basis from the opening of the Asian business day to the close of business in the US.”

When Clearstream extended the settlement window in Asia in 2009 the firm  set up an operating centre in Singapore. However Delestienne said that in the first US phase Clearstream will extend operational support but continue to operate out of Luxembourg, Frankfurt and Prague.

“Today we have a representative office in New York, offering customer support,” he said. “For subsequent phases of the extension, we will consider providing direct operation in the American timezone, but no formal decision has been made.”

In addition to attracting customers in the US, the longer settlement period should also help win business from Latin America according to Delestienne.

“Latin America is one of the regions where growth will come from and we are looking to expand in a number of markets across our business segments,” he added. “We have existing Latin American clients who will benefit from the increase in the settlement window but we hope to develop more, given that the appetite in these markets is clearly there.”

Delestienne gave the example of the collateral management franchise where Clearstream has launched partnerships with market infrastructures in Australia, Brazil, South Africa and Singapore and is also in discussions with the US Depository Trust & Clearing Corporation on its margin transit utility.

In May last year DTCC and Euroclear, the pan-European clearer, signed a memorandum of understanding to create a joint collateral processing service allowing firms to manage collateral held at both firms’ depositories as a single pool. The DTCC’s margin transit utility and Euroclear’s global collateral highway will provide straight-through-processing.

In addition to international expansion, Clearstream will also have to negotiate new European regulations.

“We have a heavy regulatory agenda in Europe which does offer opportunities to market infrastructures like us, but we also need to continue to look at opportunities outside the region,” said Delestienne.

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