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Today, the international central securities depository (ICSD) Clearstream (previously Cedel) turns 40 years. It was founded on 28 September 1970 by 66 financial institutions from 11 countries to reduce the costs and risks of settling securities in the Eurobond market. Settlement and safekeeping of Eurobonds is still Clearstream’s core business, accounting for 47 percent of its revenues, and with a market share of 37 percent (August 2010).
The post-trade business is sometimes referred to as the “plumbing of the financial system”. Indeed and simply put, it is about a worldwide network of tubes through which securities are transferred in return for cash between banks, exchanges or other clients and a large depository. In essence, Clearstream handles the property rights of the participants of the worldwide financial markets when it is looking after e.g. dividends and stock splits are being booked and securities are correctly entered into the account of the clients.
Clearstream started as a provider of the post-trade infrastructure for the Eurobond market. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry, offering access to a growing number of markets in Europe. But Clearstream also offers additional services in the areas of cross-border custody, investment funds services and global securities financing where it is one of four global providers of collateral management services.
Jeffrey Tessler, CEO Clearstream, said: “Clearstream’s goal was and continues to be to bring simplicity to the post-trade services industry by offering the complete range of our services through a single window. We will take advantage of the emerging European market infrastructure and will continue to build competitiveness in the cross-border securities processing area through interoperability and partnerships.”
Clearstream’s global network of domestic links includes 47 countries. Clearstream’s customers comprise approximately 2,500 financial institutions in over 110 countries. With almost €11 trillion in assets under custody, the ICSD is one of the world’s largest settlement and custody firms for domestic and international securities. Headquartered in Luxembourg, with operations based in Luxembourg, Frankfurt, Prague and Singapore, Clearstream has also offices in Dubai, Hong Kong, London, New York and Tokyo.
Major company milestones
1970 Foundation of Clearstream (by the time Cedel)1979 Cedel launches its Securities Lending and Borrowing Service
1985 Cedel pioneers CSD links, connecting primarily to German and Austrian CSDs
1992 Cedel launches Triparty repurchase service in Europe
1993 Implementation of the new Bridge agreement with Morgan Guaranty/Euroclear
1996 Cedel organizes its first GSF (Global Securities Financing) Summit
1999 Cedel International becomes first clearing and settlement organisation to offer continuous settlement
2000 Clearstream is created through merger between Cedel International and Deutsche Börse Clearing
2000 Clearstream launches Vestima, a versatile multi-currency business-to-business trading solution for the investment funds market
2002 Clearstream launches CreationOnline, giving customers real-time access to their broad range of services.
2002 Clearstream develops CASCADE RTS, providing an efficient gateway for the international investment community to settle transactions with German securities.
2004 Introduction of Automated Daytime Bridge.
2005 Launch of Vestima+
2005 Launch of Euro GC Pooling through Clearstream’s Global Securities Financing Services
2006 Launch of ASLplus, a service that increases lenders’ portfolio yield, with Clearstream acting as principal and single borrower
2007 Launch of Clearstream’s Central Facility for Funds (CFF), improving the efficiency of post-trade processing and reducing risk in the market
2008 Founding member of Link up Markets joint venture
2010 Clearstream launches Triparty for Equities and Funds
2010 Clearstream is to deliver collateral management on behalf of the Brazilian CSD CETIP
2010 Trade repository REGIS-TR to be founded
