Euroclear plc and Euronext NV have signed an agreement for the full acquisition by Euroclear of CIK, the Belgian central securities depository (CSD) that is currently a wholly owned subsidiary of Euronext.
Subject to Euroclear Board approval, the effective date of the transaction is planned for 1 January 2006.
From that date, CIK – which will be renamed Euroclear Belgium - will become a wholly owned subsidiary of Euroclear SA/NV and a sister company to the international and other national CSDs of the Euroclear group. Completion of the transaction is dependent upon fulfilling the relevant legal requirements and obtaining the necessary regulatory consents.
Ignace R. Combes, Deputy Chief Executive Officer of Euroclear SA/NV, said: "The excellent relationship we have enjoyed with CIK over the years will make for a particularly easy transition to the Euroclear group. As one integrated organisation, our respective clients will benefit from greater opportunities to settle more cross-border transactions at domestic-level prices and efficiency levels, thanks to the strategy of consolidation and harmonisation that we are pursuing across all Euroclear group markets. In addition, Belgian clients will benefit from a single entry point for most of their settlement activity, in physical as well as immobilised form."
Olivier Lefebvre, Member of the Managing Board of Euronext NV, said: "The integration of CIK into the Euroclear group is an additional step towards the completion of Euronext's horizontal business model based on straight-through processing and a single order book within the Euronext markets. This new achievement also fits perfectly with the ongoing consolidation and rationalisation of Europe's post-trade processing infrastructure, and will enable CIK to continue the development of new services for its clients."
With CIK becoming a part of the Euroclear group, the delivery of a consolidated settlement platform for the three Euronext markets (Belgium, France and the Netherlands) that both organisations have been planning, with the assistance of the Belgian Market Advisory Committee (MAC), will be much more efficient. CIK and the Belgian market have also been actively involved in the work being done by Euroclear to harmonise market rules and practices across all Euroclear markets, in line with the Giovannini Group recommendations.
Under the terms of the agreement, both the book-entry and physical securities business of CIK – including responsibility for the CIK vault – will transfer to Euroclear.
As the Belgian financial market has not yet fully dematerialised, Euroclear Belgium will continue to operate the CIK Center, where redemptions of, and coupon payments on, bearer securities are centralised. The PRIOS service, which facilitates the printing of physical securities on demand, as well as services such as the Domestic Investment Fund Service and Registrar Services, will continue to operate as they do today. As a Euroclear group market, Belgium will also benefit from the experience of the other Euroclear group markets that have implemented, or are undergoing, full securities dematerialisation.
All 90 members of the CIK staff will become employees of the Euroclear group. Stéphane Bernard, currently General Manager of CIK, will retain this role within Euroclear Belgium.
The financial terms of the transaction involve a share exchange between Euroclear plc and Euronext. As a result of the sale of CIK to Euroclear, Euronext will increase its current shareholding of Euroclear plc shares, held directly and indirectly, to 4.0%.