Once fully implemented, the automated daytime Bridge will deliver a significant, new level of interoperability between the two ICSDs. Customers of both ICSDs will benefit from improved Bridge transaction settlement efficiency by having greater flexibility to repair unmatched instructions and by automatically recycling failed trades in the daytime cycle. These enhancements will also provide the infrastructure for same-day (T+0) Bridge transactions.
Phase One will improve settlement efficiency of Bridge transactions in general. Clients will be able to settle a wider range of securities transactions by being able to re-deliver securities from many more local markets across the Bridge during the day. This phase will also allow clients to reduce their financing costs by having more opportunities to settle Bridge transactions that failed during the overnight process. Also at this time, there will be a reduction in and better control of the risk exposure between the ICSDs for Bridge transactions.
Phase Two, set for launch in November 2004, will allow same-day settlement of trades over the Bridge, and in particular, repo and securities financing transactions between ICSD counterparties. This phase will extend Bridge instruction input deadlines into the daytime (from 20:30 the evening before settlement date to 13:30 on settlement date) and will bring further cost and settlement efficiencies by enabling clients to repair previously unmatched instructions.
Yves Poullet, Managing Director and head of the Operations and Network Management Division at Euroclear Bank, commented: “The automated daytime Bridge is a timely initiative to accelerate further growth in the eurobond and international securities markets. Euroclear Bank is committed to work with Clearstream and the market on its continued evolution, particularly for same-day distribution of new issues across the Bridge. The openness and smooth teamwork demonstrated by both ICSDs in delivering the automated daytime Bridge on time underscores our mutual recognition of the need for infrastructure service provider co-operation and interoperability.”
Matthias Ganz, Chief Operating Officer, Deutsche Börse Group, added: “We have been working very closely with Euroclear Bank to ensure that both phases are implemented successfully. The most significant benefits to the market will be delivered with Phase Two in November as the same day settlement of trades over the Bridge will in particular improve repo and securities financing transactions. Further cost benefits will also result from the ability to repair previously unmatched instructions.”
