As international central depository Clearstream, a subsidiary of Deutsche Brse, is at the heart of the debate on Target 2 Securities and the Code of conduct. Its President, Jeff Tessler, returns to these mutations in the inbranch industry.
The ECB consults with the players in the market for the Target 2 Securities project. What is your position
Clearstream is cautiously constructive. We work with the ECB, but we need to get more detailed information. The ECB provides that the cost will be 28 cents per transaction, but this takes it really into account of the transaction in its entirety We have not yet succeeded in whether it is possible to reduce the costs to achieve this projection to 28 cents, without degrading the quality of the services. Another point which remains vague, should the national depository "dcommissionner" their existing electronic systems or will they keep them and link them to the new system of the European Central Bank Finally, the ECB said that accession to Target 2 Securities would be optional, but in fact, custodians are not obliged to participate for not being marginalized For the moment, the European Central Bank responded yet to these issues, among others.
Do you fear an erosion of your activity
It all depends on what the project will be in the final. For the moment, it is just matter of outsourcing regulations in Central Bank money. A small part of the activity of national depositary of Clearstream, Clearstream Frankfurt, would be so concerned, but new opportunities can also appear, in services in trade currency in the Multicurrency.
The profession is working on a Code of conduct. When will it be completed
We have not yet idea specific delays, but it will not take years. Deutsche Brse crossed a milestone by asking British, French, Dutch, Belgian and Portuguese inbranch services to open an interoperability link. And we have our answer to LCH Clearnet, making this request. This is the most difficult to implement in the Code of conduct, and will serve as a test. We can say that the first phase, concerning the transparency of prices, is completed. For details of services rendered, I'm not sure that our customers will want to buy unbundled services, for example the France compensation, the settlement in Germany... This would represent additional costs in terms of infrastructure.
How much will cost the application of the Code of conduct for Clearstream
In fact, tantamount to calculate the cost of setting up a link, and it depends on the partner. The most important source of cost remains internal resources: we must ensure that we can respond to all requests with our current resources. In fact, activities of inbranch competition presents both risks and opportunities.
What are for you the advantages of the model of "elevator"
With interoperability, the debate between horizontal and vertical models disappeared because, with the Code of conduct, everyone can access the services of inbranch of the clearing houses. That said, there are synergies between the activities of Deutsche Brse. For example, it provides Euro GC Pooling market of the collateral and delivered pensions: a title traded in this segment can be negotiated on Eurex, offset on Eurex Clearing and delivered by Clearstream.
Deutsche Brse has always intend to Clearstream an independent legal entity
Deutsche Brse sought a way to finance the acquisition of the American International Securities Exchange without affecting the rating AA of Clearstream and contemplated changing the legal status of the company. We opted for another structure of funding and is no longer question of such a transaction today.
Legal Affairs in which Clearstream is involved have an impact on your business
We are in the Clearstream case as the Watergate Hotel is to the Watergate scandal. Our name has been used without that we have nothing to do with a French political case. This was an artificial event which has distracted us our daily management. None of our customers, other than those based in France, no one has heard about. In the statement that continues today in France, Clearstream is part civil to understand why our name had been used thus, and by whom.