Euroclear has responded to industry concerns about risk management, corporate governance and transparency issues by outlining a plan to overhaul its entire group structure.
The new structure - designed to maximise client protection against systemic risk, improve transparency in inter-company service delivery and cost allocation, and pave the way for future alliances or mergers - will be presented for review by regulators and employee works councils. A final decision is expected in early 2004, with implementation targeted for year-end.
Under the proposals, a new company, Euroclear SA/NV, will take onwership of the group's single settlement engine and provide shared services to all subsidiary companies. It is also proposed that Euroclear Bank, the international central securities depository, and each of the national CSDs - CrestCo, Euroclear France and Euroclear Netherlands - become sister subsidiaries of Euroclear SA/NV.
By making Euroclear Bank a sister company rather than the owner of the CSDs of the group, the new structure should answer the concerns about the potential for systemic risk in the event of insolvency. It should also address transparency issues, ensuring no cross-subsidies within the group.
Pierre Francotte, Euroclear Bank CEO says: "Clients would continue to access Euroclear services through Euroclear Bank and the CSDs, rather than through the new company, as this new company would only provide services to the other Euroclear group entities, not to clients."