EuroCCP Launches Clearing and Settlement for Depositary Receipts

European Central Counterparty (EuroCCP) will begin clearing and settling 120 of the most heavily-traded listed depositary receipts, which are transferable securities that represent ownership of a specified number of shares in a foreign company, as of 16 October 2009. With its new central counterparty (CCP) service offering, EuroCCP extends to depositary receipts transactions the efficiency, cost-saving and counterparty risk protection benefits it already provides to clients’ equities transactions.

EuroCCP has further extended its relationship with Citi’s Global Transaction Services (GTS) by appointing the firm as EuroCCP’s settlement agent for these instruments.

Initially, all transactions will settle at Euroclear Bank. Some International Securities Identification Numbers (ISINs) are eligible both at Euroclear Bank and the Depository Trust Company (DTC) and, for these, after the initial period, the settlement location will be determined at the ISIN level at the one location most convenient to the majority of participants – either Euroclear Bank or DTC. This approach will facilitate customers’ position management, limit customers’ need for cross-border realignments, and help to reduce overall processing costs.

James Cressy, head of EuroCCP operations, said: “Diversification of the instruments covered by EuroCCP clearing and settlement offers new levels of safety to the markets by extending our central counterparty clearing to a new category of securities. There was clear market interest in the EuroCCP depositary receipts service offering, and we worked in close co-operation with our users to develop it.”

Depositary receipts transactions cleared and settled through EuroCCP will be priced at the most competitive levels now available in Europe, with fees starting at €0.030 per side and falling to €0.002 per side. And for those transactions subject to voluntary corporate actions, EuroCCP will offer buyer protection by allowing customers to make elections on failing positions.

Turquoise will be the first multilateral trading facility (MTF) to offer trading in depositary receipts cleared through EuroCCP. Virtually all of these issues are priced in US dollars.


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