Euroclear Nederland Ends Paper Certificates

Euroclear Nederland (formerly Necigef), the Dutch central security depository (CSD), is one of the key contributors in delivering a ‘paperless’ securities market for the Netherlands.

Euroclear Nederland recently completed the full-scale dematerialisation process of all Dutch securities classes (bonds, equities and depository receipts) for the Dutch capital market. The final securities certificate to be entered into the CSD’s electronic registration system marks the end of an era in the use of physical certificates to connote investment ownership. The dematerialisation process was started by Necigef in the 1990s following a market-wide call to modernise and make the Dutch capital market safer and more efficient.

Subsequent changes to Dutch securities law in 2000 enabled Euroclear Nederland to use a single global certificate to represent an entire issue, instead of printing an individual piece of paper for each certificate. Changes to laws which took effect on 1 January 2011, meant that as of 31 December 2012, all securities held in custody with the CSD have been converted into either electronic book-entries or a global note.

Valerie Urbain, Chief Executive Officer of Euroclear Nederland, stated: “Today, we have consigned the last listed paper certificate in the Dutch giro system to history. The Netherlands has always had a strong affinity with stock certificates. We can trace the world’s oldest share certificate to that of the Verenigde Oost-Indische Compagnie’s issue of 1606, the first public share offering anywhere. Putting nostalgia aside, Euroclear Nederland, together with our regulators, local banks and other parts of the Dutch capital market infrastructure, is ready to usher in a modern, electronic form of securities ownership.”

Urbain continued: “I would like to thank all those involved in the dematerialisation process – it is testament to the exemplary co-operation and performance of our capital markets that we can successfully transform out-dated industry standards into better and safer processes. The legacy we are creating is one of security and ease – greatly benefitting all financial entities and their underlying clients by holding assets electronically.”

The paper trail

In the early 1990s, Euroclear Nederland offered a securities delivery and receipt service for listed and non-listed securities to boost the competitiveness of the Dutch capital market by centralising and dematerialising paper securities. At its height in the early 1990s, Euroclear Nederland’s vaults in Amsterdam held over eight million pieces of paper representing client assets worth EUR 800 billion. The vaults in Amsterdam are now closed. The new book-entry service yields significant cost savings for Dutch banks, as well as meaningful risk reductions, as they no longer need to support costly infrastructure and security systems to house securities certificates.