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Euroclear

Euroclear is a clearance and settlement organization that deals with carrying out transactions connected with securities. Euroclear is an international depository and clearing center established in 1968, serving the OTC international stock market. It allows multi currency settlements. EuroClear performs the functions of a clearing center, a depository and a settlement system.

Euroclear explained

Euroclear is a Brussels-based clearing company founded in 1968 by Morgan Guaranty Trust Co. It is responsible for various functions that include the safe depositing of the securities, securities transactions carried out. Euroclear also manages the brokering.

With over 2000 participating financial institutions in 90 countries and a securities turnover of €500 trillion, Euroclear is the world's largest clearing system for international securities, ahead of its competitor Clearstream. Euroclear holds €27.5 trillion in assets in custody for its customers. Settlement volume in 2015 was over 550,000 transactions per day.

The merger in 2000 of the three French, Belgian and Dutch depositories with Euroclear Bank into a new Group, Euroclear, was explicitly motivated by the project to standardize their custody and settlement systems.

The project Euroclear is divided into three phases. The first phase of Euroclear, the Single Settlement Engine (SSE), consists of converging the three settlement systems developed until now by each of the four depositories into a single system. Euroclear SSE replaces the SBI and SLAB subsystems of SICOVAM, the FMS system in Brussels, and TfT in Amsterdam. The Euroclear ISB sub-system will become the responsibility of the clearing house Clearnet SA, of which Euroclear will acquire 20% of the capital.

The second stage of Euroclear is called ESES, which stands for "Euroclear Settlement of Euronext Securities". Within the universe of securities settled/delivered by the Euroclear Group, it refers to the securities listed by the various market undertakings of the Euronext Group, i.e. the Paris, Brussels and Amsterdam stock exchanges. Euronext Liffe, which lists derivatives, not securities, is not concerned, and the Lisbon stock exchange, which has since joined Euronext, is not concerned either since it delivers its securities elsewhere. On the other hand, Euroclear Bank, whose management remains autonomous, is not included in the scope insofar as the securities deposited there are not listed by Euronext. This time, the project Euroclear  consists of standardizing the procedures for transmitting instructions to participants, in particular by offering them a common communication interface (CCI) instead of the technical gateways that were previously specific to each central depository. The system went live in 20072, but is being abandoned due to a lack of serious studies.

The third and final stage of Euroclear is called the Single Platform, better known by its acronym SP. This consists of migrating the databases of the 4 depositories into a single one and merging the transmission channels into a single one, which was made possible by the implementation of the ESS and the ICC respectively. Following the abandonment of the CCI project, SP is also put on hold.

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