Euroclear Bank and Clearstream International have announced the development of a new, automated, daytime Bridge between the two international central securities depositories (ICSDs).
The 'Bridge' is an electronic communications link for the settlement of securities transactions between counterparties in Clearstream Banking Luxembourg and Euroclear Bank.
This new development will supplement the existing overnight electronic Bridge and will replace the manually operated daytime Bridge that currently links the two ICSDs and will allow for same-day Bridge transactions. The launch timetable is targeted in two phases during 2004 to ease implementation.
Phase one of the upgrade, scheduled for implementation in June 2004, will improve settlement efficiency of Bridge transactions in general, say the depositories. Clients will be able to settle a wider range of securities transactions by being able to re-deliver securities from many more local markets across the Bridge during the day. The upgrade will also allow clients to reduce their financing costs by having more opportunities to settle Bridge transactions that failed during the overnight process.
Phase two, targeted for launch in November 2004, will allow same-day settlement of trades over the Bridge, and in particular, repo and securities financing transactions between ICSD counterparties. This phase will extend Bridge instruction input deadlines into the daytime (from 20:30 the evening before settlement date to 13:30 on settlement date) and will provide the means for same-day distribution of new issues during the daytime over the Bridge.
As an interim measure, the two ICSDs have also agreed to implement enhancements to the existing manually operated daytime Bridge. With effect from November 2003, the limit on the number of instructions that can be handled manually will be increased. Instructions with a market value in excess of EUR1 million that have failed to settle during the overnight settlement process will be eligible for daytime delivery. In addition, new same-day instructions for transactions with a market value in excess of EUR5 million will also become eligible at that time.