Major Clearers join forces to create European Clearing House

Cedel International and Deutsche Börse Clearing have announced the merger of clearing, settlement and custody activities to create new Cedel International. New Cedel International is the first step towards the creation of a truly European Clearing House, matching the model of the United States' DTC. A Memorandum of Understanding has been agreed with SBF Group & SICOVAM to merge with new Cedel International. New Cedel International represents an alternative clearing solution for business from the common trading platform proposed by the Alliance of European Stock Exchanges. An invitation has been extended to other European, national and international Central Securities Depositories to join. Cedel International, the Luxembourg based international securities depository and Deutsche Börse Clearing, the German central securities depository, today announced a merger in order to form new Cedel International. This will create by far the largest European clearing organisation, providing settlement and custody services for bonds and equities in Europe and worldwide. This merger is the first step towards the creation of a truly European Clearing House. At the same time, SBF Group, the holding company of the Paris Bourse and SICOVAM, the French central securities depository, have signed a memorandum of understanding to join the new venture, once it has been legally established. The creation of the European Clearing House is critical to establish a more efficient clearing and settlement process in order to reduce costs, risks and liquidity requirements. Securities transaction volume has increased dramatically in recent years and is expected to experience further growth following the introduction of the euro and the establishment of European stock indices, which will lead to the creation of a single electronic trading platform for blue-chip European stocks. The European Clearing House represents an alternative clearing solution for business from the common trading platform proposed by the Alliance of European Stock Exchanges. The shared vision of the partners is an open, friendly and flexible structure which allows national and international central securities depositories in Europe to join at a pace to suit their individual needs. Participation can be achieved either through electronic communication links, outsourcing of securities processing services or merger. An invitation is extended to other European national and international central securities depositories to join. The European Clearing House will offer significant benefits to the markets; lower costs, reduced risks and better liquidity on a real time basis. It will standardise processes and provide customers with a single entry point to the market. The new platform also maintains the efficiency of national clearers and depositories and combines it with the cross-border expertise of the international clearers and depositories. André Lussi, President and CEO of Cedel International, Werner Seifert, CEO of Deutsche Börse, and chairman of the supervisory board of Deutsche Börse Clearing and Jean-François Théodore, Chairman and CEO of SBF Group & Chairman of SICOVAM, commented: "Our common agreed vision is to become the leading provider of clearing, settlement and custody services. After looking at the various possibilities for the market and speaking to customers and other market participants we concluded that we should take the direction that we are announcing today. This is a solution that is European, neutral and open for others to join. We look forward to making future announcements as other clearing organisations join with us." In a first step, new Cedel International will be equally owned by Deutsche Börse AG and Cedel International. In a second step, SBF Group & SICOVAM will join new Cedel International. The three participants in new Cedel International agree to become true partners. The level of participation by SBF Group & SICOVAM will be decided on the basis of a fair valuation, consistent with that used in the merger of Cedel International and Deutsche Börse Clearing. New Cedel International will be registered and headquartered in Luxembourg, with a Board of Directors comprising representatives proposed by each of Deutsche Börse AG and Cedel International. Robert Douglass, the current Chairman of Cedel International, will be the Chairman of the new company. André Lussi, currently President and CEO of Cedel International, will assume the same position in the new company. Jean-François Théodore, the Chairman and CEO of SBF Group and Chairman of SICOVAM, has accepted an invitation to join the Board of new Cedel International. Jürgen Blitz and Matthias Ganz, who are on the Executive Board of Deutsche Börse Clearing, will then join the Group Executive Management of the new company. The merger between Cedel International and Deutsche Börse Clearing has been agreed by the Board of Directors of Cedel International and the Management Board of Deutsche Börse AG. Similarly, the Memorandum of Understanding with SBF Group & SICOVAM has been approved by the Boards of Directors of each partner. The transaction between Cedel International and Deutsche Börse AG requires shareholder and regulatory approvals and the merger is expected to be formally completed with effect from 1 January 2000. The transaction with SBF Group & SICOVAM will follow soon afterwards. Cedel International and Deutsche Börse AG have agreed to adopt a single IT system based on the IT platform of Cedel Global Services, a wholly-owned subsidiary of Cedel International. SBF Group & SICOVAM have also agreed to adopt the single IT system. A step by step migration to the new IT platform will be implemented. The partners will also evaluate if Deutsche Börse Clearing 's and SBF & SICOVAM's system components could be used to enhance the Cedel International single IT platform.