This union reflects the common view and commitment of all the parties to the MoU to integrate the clearance and settlement functions of CIK and Necigef onto a single platform, in a single entity, and in a single legal jurisdiction. The needs of EURONEXT and market participants will thus be met at the lowest possible cost and with the greatest straight-through settlement efficiencies. A merger agreement should be finalized between the parties in the first half of 2001.
Upon the merger becoming effective, all settlement, custody, and related securities services for Dutch domestic securities transactions, and Belgian equity and corporate bond domestic transactions will be provided by the Euroclear group. The merger is designed to take place in two phases over a two-year period, as follows: Phase 1: DVP links will be established between CIK, Necigef, and the Euroclear System as a first step to offering pan-European settlement opportunities to the clients of BXS and AEX. Settlement of the corresponding EURONEXT trades, netted through Clearnet, will thus be possible in the Euroclear System, CIK, and Necigef; Phase 2: A common, dual settlement platform for both central bank and commercial bank money settlement will serve the needs of CIK and Necigef clients, leveraging the highly efficient real-time platforms of both Euroclear Bank and Sicovam SA.
During the transition period, systems and service upgrades will continue to be made at both CIK and Necigef in order to maintain the delivery of quality services to users. While it is ultimately the intention to centralize all settlement and custody requirements within the Euroclear System, certain services will continue to be offered locally during this period, under the prevailing Belgian and Dutch legislation, and notably in respect of local investor protection. After the transition period, the physical securities-related business will move to EURONEXT as a local service to Belgian and Dutch users. Following their transfer to the Euroclear group, CIK and Necigef clients will continue to receive the high levels of service they currently enjoy from CIK and Necigef.
With this merger, the Euroclear group will have consolidated the CSD functions of four European markets and of Euroclear Bank, following the announcements earlier this year of the merger accord with Sicovam SA, and of the decision of the Irish authorities to outsource their government bond settlement activity to the Euroclear System.
A. Chris Tupker, Euroclear Chairman, said: “Today’s announcement marks the advent of a truly pan-European settlement infrastructure. By leveraging existing real-time technology platforms with proven strengths, and by relying on the recognized expertise of the teams from all the partners in the Euroclear group, this consolidation will both minimize the transition risks for users and allow them to reap substantial cost savings and infrastructure synergies.”
Olivier Lefebvre, Chairman of BXS/CIK, commented: “This agreement means that all the components are in place for a fully integrated European trading, clearing, netting, and settlement service. The market has been demanding integration of the front and back office, and that is exactly what we are delivering here today.”
George Möller, President of Amsterdam Exchanges (AEX), stated: “We are in a unique position to offer our clients genuine straight-through processing and rapid time-to-market, whilst also embarking upon a process to make a single settlement system available to them. With its large holdings in nationally and internationally listed stocks and bonds, this merger will add significantly to transparency for our clients. Strong local penetration in the Netherlands, France, and Belgium, and the combined expertise we bring to stock settlement and collateral services, will create a benchmark in settlement practices in Europe.”
