List of Tables and Figures ix
Preface xi
Part I New problems. New solutions 1
1 Settling Securities Across Borders 3
1.1 Turnover in the trillions 3
1.2 Process and players 9
2 The Eurobond Market and the New York Settlement Crisis 17
2.1 Autostrade shows the way 17
2.2 Foreign dollar bonds and their settlement 19
2.3 From Autostrade to the New York settlement crisis 20
2.4 The AIBD 23
2.5 Settlement services in Luxembourg 25
3 The ICSDs – Euroclear and Cedel 29
3.1 Closings in Brussels 29
3.2 The creation of Euroclear 31
3.3 Establishing Cedel in Luxembourg 35
3.4 Cedel’s success 37
3.5 The wider settlement picture 39
4 Euroclear Fights Back 43
4.1 The sale of Euroclear to its users 43
4.2 Difficult days 45
4.3 Commitment to investment 48
4.4 Euclid 51
4.5 Securities lending and borrowing 52
4.6 The Bridge 54
4.7 Prospering in difficult times 55
Part II Winds of Change 61
5 New Markets, New Tensions 63
5.1 Caviar and champagne 63
5.2 The 1980s – Deregulation and securitisation 66
5.3 Diversification at Euroclear 72
5.4 The Belgian cooperative 76
6 After the Crash 79
6.1 Strengthening cooperation and national systems 79
6.2 European considerations 82
6.3 American influences 84
6.4 Central bankers push for DvP 87
7 The Coming of the Euro 91
7.1 A world transformed 91
7.2 Beyond G30 92
7.3 The EMI and Lamfalussy 94
7.4 The growth of repo activity 97
7.5 The ECB and securities settlement 100
Part III An Industry in Ferment 105
8 The Rivals 107
8.1 Euroclear and the boom in domestic markets 107
8.2 Lussi and the revival of Cedel 116
9 Change at the Exchanges and CSDs 123
9.1 Investment and consolidation 123
9.2 Seifert in Frankfurt – a story of vertical integration 125
9.3 Th´eodore in Paris – innovation through IT 129
9.4 Taurus and CREST – a horizontal system by accident 133
9.5 The Swiss Value Chain 135
9.6 Different blueprints 136
10 Corporate Manoeuvrings 141
10.1 Pressure for change 141
10.2 A European clearing house? 143
10.3 A meeting of minds in Marrakech 144
10.4 Dark days for Euroclear 146
10.5 The fight back begins 147
10.6 The French defect 149
11 Euroclear Transformed 151
11.1 Euroclear separates from Morgan 151
11.2 The creation of Euronext 156
11.3 Euroclear acquires Sicovam 158
12 Seifert’s Silo 163
12.1 A flurry of initiatives 163
12.2 Lussi’s fortunes ebb 165
12.3 Lussi’s downfall 167
12.4 The banks change tack 170
12.5 Seifert secures Clearstream 171
13 Europe with Two Settlement Models 175
13.1 Euroclear acquires CREST 175
13.2 A sub-optimal outcome 179
13.3 Embedding the vertical and horizontal models 182
13.4 LCH and Clearnet merge 184
13.5 Fair & Clear 186
13.6 Changes in structures and governance 187
Part IV An Issue for Europe 191
14 The EU Reacts 193
14.1 The Lisbon Agenda 193
14.2 The Lamfalussy Committee of Wise Men 194
14.3 The Giovannini Reports 196
14.4 The cost of fragmentation 200
14.5 The Commission responds 201
14.6 The Andria Report 203
14.7 The ESCB/CESR standards 203
14.8 The G30 and EFR Reports 205
14.9 MiFID 206
14.10 The Commission’s second communication 207
14.11 The arrival of McCreevy 208
15 Setting Parameters 213
15.1 Algorithms and exchanges 213
15.2 Seifert and the law of unintended consequences 215
15.3 Exchange consolidation: an unpredictable catalyst 217
15.4 Competition authorities turn against silos 218
15.5 Competition and interoperability 220
15.6 For and against a single CCP 222
15.7 User discontent 224
15.8 Change at Euroclear 227
16 Work in Progress 233
16.1 Euroclear’s domestic market for Europe 233
16.2 Cesame and dismantling the Giovannini barriers 238
17 Frameworks for the Future 243
17.1 Two solutions at once 243
17.2 The code of conduct 244
17.3 Target2-Securities 250
17.4 T2S – the follow-up 254
17.5 Questions and more questions 259
18 Conclusions and Reflections 265
Appendices 271
A References and bibliography 271
B Key dates for the securities settlement industry in Europe 279
C Who’s who in the history of European securities settlement 291
D Glossary of technical terms 311
E Postscript 329
Index 333
