SIX and Clearstream team up as post-trade consolidation pressure grows

SIX and Clearstream team up as post-trade consolidation pressure grows

SIX Securities Services and Clearstream have struck a deal to provide shared services to local and European markets, as rising costs and pressure for diversification force consolidation in the European clearing and settlement industry.

The two companies signed a Letter of Intent in August and are now focused on fleshing out the details that will lead to a Memorandum of Understanding targeted for mid-December with the aim of jointly coming to market in 2017.

In a statement, the two depositories say: "With European financial market infrastructures (FMI) facing substantially increased costs of regulation and compliance, it has become essential for FMI’s to move towards market consolidation and rationalisation to offset these new challenges."

The advent of the European Central bank's T2S project, which provides a one-stop shop for clearing and settlement across European markets, has upped the pressure on domestic and international central securities depositories to retain their relevance by cutting costs and developing new value added services.

Thomas Zeeb, Division CEO SIX Securities Services says: “Our industry is undergoing a profound change in the way it structures itself and in how it needs to perform. We believe that sustainable success in the future will be defined by collaboration focused on providing true value for clients. The goal of this partnership is to explore bringing together platforms, joint development of added-value services, and reduce the myriad redundancies in current post-trade processing chains.”

Jeffrey Tessler, chairman of Clearstream and member of the executive board of Deutsche Börse, likewise refers to "change on an unprecedented scale" in the European post-trade landscape.

"The corresponding cost increase for market infrastructure and their clients calls for innovative service solutions and greater focus on economies of scale,” he says.

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