Post-trade risk and custody specialists-+Counterp… · Euroclear UK and Ireland (formerly...
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1st Floor, 1 Farrier’s Yard, 77 Fulham Palace Road, London W6 8AH Tel: +44 (0) 20 8600 2300 | Email: [email protected] | thomasmurray.com omas Murray Product Overview Counterparty and Data Management Tool An online solution for managing counterparty banking relationships, associated account details, and documentation, with integrated market intelligence. Counterparty relationship management ■ Review the overall relationship of banking relationships in a centralised, structured and consolidated platform ■ Centrally monitor, manage, and maintain all account information, static data, and associated documents ■ Full audit trail gives transparency of your banking network for regulatory compliance ■ Online updating with set-up tailored to banks individual requirements ■ AML/KYC requirements management within the tool ■ Reduce your manual processes and improve your ability to share information internally ■ MIS, newsflashes, global and specific search functionality, plus market holidays Market intelligence Cash & Treasury Market Profiles ■ Local market rules and regulations governing cash, treasury, payments, and FX, in global cash markets Securities Market Information ■ Local market rules for the trading, clearing, settlement, and custody in securities markets globally Unique features ■ Covers over 100 markets globally ■ Updated daily with news flashes that advise of on going changes ■ Option to white label and customise to banks own requirements Post-trade risk and custody specialists Thomas Murray Marketflow - Counterparty and Data Management Tool UK Capital Market Infrastructure Risk Assessment Thomas Murray has assigned this market an Assessment and Outlook of: Overall Summary There are a number of trading platforms on which UK securities can be traded. These can route to three CCPs (LCH.Clearnet, SIX x-clear or EuroCCP) or settle directly at the single CSD, Euroclear UK and Ireland (formerly CRESTCo). Cash settlement in GBP and EUR is on an RTGS basis via the Bank of England. Domestic settlement is on a T+3 basis except for Gilts (T+1) and money market instruments (T+0). CREST-eligible securities settle on a model 1 basis, or model 3 for LCH.Clearnet transactions. Settlement Summary Euroclear UK and Ireland operates a sophisticated high volume settlement system offering simultaneous, final and irrevocable DVP in central bank funds. The system is now based on Euroclear's Single Settlement Engine (SSE), which was also implemented in the ESES Euroclear entities to provide for a single book-entry accounting platform. In order to provide RTGS settlement via the Bank of England, Euroclear UK and Ireland operates self-collateralising repos which utilise enormous amounts of collateral on a daily basis - to the detriment of the rest of the market. LCH.Clearnet, SIX x-clear or EuroCCP benefit from the settlement assurance guarantee from the CCP. However, OTC and client-side settlements are not covered, there are no automatic borrowing facilities and there are very late (SD+30) LSE buy-in arrangements to enforce settlement. Euroclear UK and Ireland has a strong balance sheet, low operational risk and very efficient procedures for settling the high volume of transactions in this market. LCH.Clearnet is also a well run operation with very good risk management controls. Overall, these components make settlement in this market very secure. Asset Safety Summary UK Depository Review and Risk Evaluation Service Euroclear UK & Ireland Qualified Assessment Support Bank(s) Instruments Supported Corporate Debt Yes Role of the Depository Euroclear UK & Ireland Ltd (formerly CRESTCo) provides the central settlement service for the UK market covering equities, corporate and government debt, money market instruments and covered warrants from the UK, Jersey, Guernsey and the Isle of Man. It also provides a similar service for Irish equities and corporate debt. Irish government debt is settled via Euroclear Bank. Euroclear UK & Ireland is a private limited company established in 1994, essentially a for- operational-profit entity, although it is not run as a profit maximiser (i.e. it is run on a non-profit basis). The Euroclear corporate structure, that came into effect on 1 January 2005, involved the creation of a new company, This company is incorporated in Belgium and is a 100% owned subsidiary of Euroclear Holding SA/NV. Euroclear Bank, Euroclear UK & Ireland, Euroclear France, Euroclear Belgium and Euroclear Nederland are all 100%- owned subsidiaries of Euroclear SA/NV. Euroclear Bank, therefore has no ownership interest in Euroclear UK & Ireland, Euroclear France or Euroclear Nederland. The legal and operating name of the CSD was changed to Euroclear UK & Ireland Ltd from CRESTCo Limited effective from 1 July 2007. The CREST settlement system owned and operated by Euroclear UK & Ireland Limited retained its previous name (i.e. CREST). Euroclear UK & Ireland is a recognised clearing house under the Financial Services Act 1986, regulated by the Bank of England. It is currently the only approved operator of a relevant clearing system under the Uncertificated Securities Euroclear has published a White Paper setting out its proposal for Euroclear Bank to become the Issuer CSD for Irish corporate securities as from March 2021. The White Paper is the outcome of a consultation Euroclear completed with the Irish market through a Working Group and Steering Board and interaction with the Irish Authorities. Risk Summary Risk Grades Outlook Overall Risk AA Stable Asset Commitment Risk Settlement of GBP, EUR and USD transactions within the CREST system is on a simultaneous RTGS basis with immediate finality. Asset commitment for both the buyer and the seller is negligible. AAA Stable Liquidity Risk Liquidity risk exposure within the CREST system arises in two parts. For securities, liquidity risk is low to moderate due to a sophisticated settlement system and an active external securities lending market, which compensates for the high liquidity demands of near real- time gross securities settlement. For cash, liquidity demands can be high if settlement is on an RTGS basis in central bank funds, since this requires pre-funding, usually on a self-collateralisation basis at the Bank of England. AA+ Stable Counterparty Risk For RTGS settlements, the CREST system offers simultaneous, irrevocable, unconditional and final DVP in central bank funds, for which there is no counterparty risk. Transactions with LCH, SIX x-clear and EuroCCP as CCPs also have very little counterparty risk. However, where securities are repoed under self-collateralisation arrangements, then a purchaser has counterparty risk on their settlement bank. All three of EUI’s settlement currencies (i.e. USD, GBP and EUR) are offered in a central bank payment model. AA+ Stable Asset Safety Risk There are different options available at the CSD to hold securities and the asset safety risk will be higher in case of omnibus accounts compared with designated segregated accounts. Nevertheless, client assets should be segregated from proprietary assets and the nominee concept is recognised in law which ensures that the holder of the account is not the final beneficial owner. Moreover, the UK market uses registered securities and all securities at the CSD are dematerialised, which further mitigates the risk. AA Stable Asset Servicing Risk Responsibility for the completeness, accuracy and timeliness of corporate action information and the execution of corporate action instructions rests with the issuers’ agents. Euroclear UK & Ireland does not accept responsibility as it does not act as A+ Stable Clearing and Settlement Asset Commitment Risk Summary Risk Grade AAA Outlook Stable Euroclear UK & Ireland Settlement of GBP, EUR and USD transactions within the CREST system is on a simultaneous RTGS basis with immediate finality. Asset commitment for both the buyer and the seller is negligible. Other Considerations Securities held outside of CREST are in physical form and can either be settled directly between participants (with an undefined asset commitment period) or lodged into CREST and dematerialised (if CREST eligible). Liquidity Risk Summary Risk Grade AA Outlook Stable Euroclear UK & Ireland Liquidity risk exposure within the CREST system arises in two parts. For securities, liquidity risk is low to moderate due to a sophisticated settlement system and an active external securities lending market, which compensates for the high liquidity demands of near real-time gross securities settlement. For cash, liquidity demands can be high if settlement is on an RTGS basis in central bank funds, since this requires pre- funding, usually on a self-collateralisation basis at the Bank of England. Other Considerations While liquidity supply within the CREST system is high, such that settlement is largely unaffected by cash or securities shortfalls, the liquidity demanded from participants can be very high, especially for cash. There is a very efficient external stock borrowing and lending market, which is well supported by Euroclear UK and Ireland. Cross Platform Netting EUI launched a service facilitating cross platform netting in August 2013. The new netting solution facilitates netting of trades from multiple trading venues. Changes to LSE Post-Trade Processing The LSE launched a project to change the post-trade processing of LSE’s SETS and SETSqx cleared trades, of which the settlement takes place in EUI CREST system.
Transcript of Post-trade risk and custody specialists-+Counterp… · Euroclear UK and Ireland (formerly...
1st Floor, 1 Farrier’s Yard, 77 Fulham Palace Road, London W6 8AH Tel: +44 (0) 20 8600 2300 | Email: [email protected] | thomasmurray.com
Thomas Murray Product OverviewCounterparty and Data Management Tool
An online solution for managing counterparty banking relationships, associated account details, and documentation, with integrated market intelligence.
Counterparty relationship management
■ Review the overall relationship of banking relationships in a centralised, structured and consolidated platform
■ Centrally monitor, manage, and maintain all account information, static data, and associated documents
■ Full audit trail gives transparency of your banking network for regulatory compliance
■ Online updating with set-up tailored to banks individual requirements
■ AML/KYC requirements management within the tool ■ Reduce your manual processes and improve your ability
to share information internally ■ MIS, newsflashes, global and specific search functionality,
plus market holidays
Market intelligence
Cash & Treasury Market Profiles ■ Local market rules and regulations governing cash, treasury,
payments, and FX, in global cash markets
Securities Market Information ■ Local market rules for the trading, clearing, settlement,
and custody in securities markets globally
Unique features ■ Covers over 100 markets globally ■ Updated daily with news flashes that advise of on
going changes ■ Option to white label and customise to banks own
requirements
Post-trade riskand custody specialists
Thomas Murray Marketflow - Counterparty and Data Management Tool
UK
Capital Market Infrastructure Risk Assessment
Thomas Murray has assigned thismarket an Assessment and Outlook of: AA- Stable
Overall Summary
There are a number of trading platforms on which UK securitiescan be traded. These can route to three CCPs (LCH.Clearnet,SIX x-clear or EuroCCP) or settle directly at the single CSD,Euroclear UK and Ireland (formerly CRESTCo). Cash settlementin GBP and EUR is on an RTGS basis via the Bank of England.Domestic settlement is on a T+3 basis except for Gilts (T+1) andmoney market instruments (T+0). CREST-eligible securitiessettle on a model 1 basis, or model 3 for LCH.Clearnettransactions.
RiskGrades
Outlook
Asset Commitment Risk AAA Stable
Liquidity Risk AA Stable
Counterparty Risk AA Stable
Financial Risk AA- Stable
Asset Safety Risk AA- Stable
Asset Servicing Risk A+ Stable
Operational Risk AA Stable
Governance andTransparency Risk
AA- Stable
Settlement Summary
Euroclear UK and Ireland operates a sophisticated high volume settlement system offering simultaneous, final andirrevocable DVP in central bank funds. The system is now based on Euroclear's Single Settlement Engine (SSE), which wasalso implemented in the ESES Euroclear entities to provide for a single book-entry accounting platform. In order to provideRTGS settlement via the Bank of England, Euroclear UK and Ireland operates self-collateralising repos which utiliseenormous amounts of collateral on a daily basis - to the detriment of the rest of the market. Trades cleared throughLCH.Clearnet, SIX x-clear or EuroCCP benefit from the settlement assurance guarantee from the CCP. However, OTC andclient-side settlements are not covered, there are no automatic borrowing facilities and there are very late (SD+30) LSEbuy-in arrangements to enforce settlement.
Euroclear UK and Ireland has a strong balance sheet, low operational risk and very efficient procedures for settling the highvolume of transactions in this market. LCH.Clearnet is also a well run operation with very good risk management controls.Overall, these components make settlement in this market very secure.
Asset Safety Summary
UK
Depository Review and Risk Evaluation Service
Euroclear UK & Ireland Qualified Assessment
Report Updated Continuouslyand Last Fully Reviewed as of:
January 2019
Support Bank(s)
Instruments Supported
Equities Corporate Debt Money Markets Government Debt Other
Yes Yes Yes Yes Yes
Role of the Depository
Euroclear UK & Ireland Ltd (formerly CRESTCo) provides the central settlement service for the UK market coveringequities, corporate and government debt, money market instruments and covered warrants from the UK, Jersey,Guernsey and the Isle of Man. It also provides a similar service for Irish equities and corporate debt. Irish government debtis settled via Euroclear Bank. Euroclear UK & Ireland is a private limited company established in 1994, essentially a for-operational-profit entity, although it is not run as a profit maximiser (i.e. it is run on a non-profit basis).
The Euroclear corporate structure, that came into effect on 1 January 2005, involved the creation of a new company,Euroclear SA/NV. This company is incorporated in Belgium and is a 100% owned subsidiary of Euroclear Holding SA/NV.Euroclear Bank, Euroclear UK & Ireland, Euroclear France, Euroclear Belgium and Euroclear Nederland are all 100%-owned subsidiaries of Euroclear SA/NV. Euroclear Bank, therefore has no ownership interest in Euroclear UK & Ireland,Euroclear France or Euroclear Nederland.
The legal and operating name of the CSD was changed to Euroclear UK & Ireland Ltd from CRESTCo Limited effective from1 July 2007. The CREST settlement system owned and operated by Euroclear UK & Ireland Limited retained its previousname (i.e. CREST).
Euroclear UK & Ireland is a recognised clearing house under the Financial Services Act 1986, regulated by the Bank ofEngland. It is currently the only approved operator of a relevant clearing system under the Uncertificated Securities
Euroclear has published a White Paper setting out its proposal for Euroclear Bank to become the Issuer CSD for Irishcorporate securities as from March 2021. The White Paper is the outcome of a consultation Euroclear completed with theIrish market through a Working Group and Steering Board and interaction with the Irish Authorities.
Risk Summary Risk Grades Outlook
Overall Risk AA Stable
Asset Commitment Risk
Settlement of GBP, EUR and USD transactions within the CREST system is on asimultaneous RTGS basis with immediate finality. Asset commitment for both the buyer andthe seller is negligible.
AAA Stable
Liquidity Risk
Liquidity risk exposure within the CREST system arises in two parts. For securities, liquidityrisk is low to moderate due to a sophisticated settlement system and an active externalsecurities lending market, which compensates for the high liquidity demands of near real-time gross securities settlement.
For cash, liquidity demands can be high if settlement is on an RTGS basis in central bankfunds, since this requires pre-funding, usually on a self-collateralisation basis at the Bank ofEngland.
AA+ Stable
Counterparty Risk
For RTGS settlements, the CREST system offers simultaneous, irrevocable, unconditionaland final DVP in central bank funds, for which there is no counterparty risk. Transactionswith LCH, SIX x-clear and EuroCCP as CCPs also have very little counterparty risk.However, where securities are repoed under self-collateralisation arrangements, then apurchaser has counterparty risk on their settlement bank. All three of EUI’s settlementcurrencies (i.e. USD, GBP and EUR) are offered in a central bank payment model.
AA+ Stable
Asset Safety Risk
There are different options available at the CSD to hold securities and the asset safety riskwill be higher in case of omnibus accounts compared with designated segregated accounts.Nevertheless, client assets should be segregated from proprietary assets and the nomineeconcept is recognised in law which ensures that the holder of the account is not the finalbeneficial owner. Moreover, the UK market uses registered securities and all securities atthe CSD are dematerialised, which further mitigates the risk.
AA Stable
Asset Servicing Risk
Responsibility for the completeness, accuracy and timeliness of corporate actioninformation and the execution of corporate action instructions rests with the issuers’agents. Euroclear UK & Ireland does not accept responsibility as it does not act as
A+ Stable
Clearing and Settlement
Asset Commitment Risk
Summary Risk Grade AAA Outlook Stable
Euroclear UK & Ireland
Settlement of GBP, EUR and USD transactions within the CREST system is on a simultaneous RTGS basis with immediatefinality. Asset commitment for both the buyer and the seller is negligible.
Other Considerations
Securities held outside of CREST are in physical form and can either be settled directly between participants (with anundefined asset commitment period) or lodged into CREST and dematerialised (if CREST eligible).
Liquidity Risk
Summary Risk Grade AA Outlook Stable
Euroclear UK & Ireland
Liquidity risk exposure within the CREST system arises in two parts. For securities, liquidity risk is low to moderate due to asophisticated settlement system and an active external securities lending market, which compensates for the high liquiditydemands of near real-time gross securities settlement.
For cash, liquidity demands can be high if settlement is on an RTGS basis in central bank funds, since this requires pre-funding, usually on a self-collateralisation basis at the Bank of England.
Other Considerations
While liquidity supply within the CREST system is high, such that settlement is largely unaffected by cash or securitiesshortfalls, the liquidity demanded from participants can be very high, especially for cash.
There is a very efficient external stock borrowing and lending market, which is well supported by Euroclear UK and Ireland.
Cross Platform Netting
EUI launched a service facilitating cross platform netting in August 2013. The new netting solution facilitates netting oftrades from multiple trading venues.
Changes to LSE Post-Trade Processing
The LSE launched a project to change the post-trade processing of LSE’s SETS and SETSqx cleared trades, of which thesettlement takes place in EUI CREST system.
1st Floor, 1 Farrier’s Yard, 77 Fulham Palace Road, London W6 8AH Tel: +44 (0) 20 8600 2300 | Email: [email protected] | thomasmurray.com
Thomas Murray Product OverviewCounterparty and Data Management Tool
Counterparty relationship management
The counterparty relationship functionality gives you full control of your cash, securities, and other bank wide relationships. It has an extensive reporting feature allowing you to create reports on all static data, account information, and documents uploaded. The tool provides full transparency, and has an embedded audit function that ensures regulatory compliance. With AML/KYC
requirements increasing, our tool is perfectly positioned as a solution to overcome the challenges of counterparty monitoring, reporting and communication.
The entire tool is permissions driven allowing full control over who can access, edit, or change every bit of data entered.
MARKET INTELLIGENCE• Cash & Treasury Market Pro� les
/ Securities Market Information fed directly into the tool
Thomas Murray Data Services
77-85 Fulham Palace Road, Hammersmith, London W6 8JA
Tel: +44 (0) 20 8600 2300 Email: [email protected] http://ds.thomasmurray.com
DOCUMENT STORAGE• Documents can be held
centrally in a structured way allowing easy retrieval and sharing of information
• AML/KYC and compliance documentation along with SLAs, pricing, T&C’s, and legal agreements are some examples of documents that can be stored
ADMINISTRATION• Set-up users
• Customise accounts
• External client access
NEWSFLASHES• Daily news� ashes advise of market
changes as they happen
• Ability to customise the � ashes for internal/external communication
• Write and issue your own news� ashes
GLOBAL ACCOUNTS• View account by legal entities and across
relationships, regions, business or product lines
• Set-up, store, and maintain all cash and securities account information
• Fully controlled and audited environment
• Complete group wide visibility of all accounts
DATA• Centralised repository of all
counterparty data
• Centralised control of accounts
• Centralised document storage e.g. fee schedules, operational guidelines, AML/KYC, and compliance information
• Online editing and publishing of all data with a full audit trail giving increased transparency and support for regulatory compliance
• Ability to integrate external data sets e.g. counterparty credit ratings, transactional volumes, payment, and rebate information
• Online updates, standardised format with fully controlled user access
REPORT / SEARCH FUNCTIONALITY• Global search – quick and simple
pull of information stored
• Report Wizard – customise reports on any stored data within the tool and export in a variety of formats
• View data in a structured and transparent way
The counterparty relationship functionality gives you full control of your cash, securities, and other bank wide relationships. It has an extensive reporting feature allowing you to create reports on all static data, account information, and documents uploaded. The tool provides full transparency, and has an embedded audit function that ensures regulatory compliance. With AML/KYC requirements increasing, our tool is perfectly positioned as a solution to overcome the challenges of counterparty monitoring, reporting and communication.
Counterparty relationship management
The entire tool is permissions driven allowing full control over who can access, edit, or change every bit of data entered.
1st Floor, 1 Farrier’s Yard, 77 Fulham Palace Road, London W6 8AH Tel: +44 (0) 20 8600 2300 | Email: [email protected] | thomasmurray.com
Thomas Murray Product OverviewCounterparty and Data Management Tool
Market intelligence
Our Cash & Treasury Market Profiles and Securities Market Information services track market practice in more than 100 countries worldwide. Maintained in real time and supported by daily newsflashes (updates), the profiles can be integrated
into the tool which enhances the data available throughout the bank. There is also the option to white label the market intelligence for distribution, both internally and externally to clients.
■ FX restrictions indicator ■ Market summary and sovereign risk ratings ■ Legal and regulatory framework and market entry
requirements ■ Benchmark interest rate details ■ Cash account operational requirements, cash pooling ■ AML/KYC, Counter Terrorism Financing ■ FX trading guidelines, clearing and settlement,
regulatory reporting ■ Payment systems guidelines, interbank clearing models ■ Interbank and central bank money market and liquidity ■ facilities ■ Corporate treasury, transfer pricing, thin capitalisation ■ Taxation including, WHT rates, DTTs, relevant
market charges ■ Holidays schedule
■ Legal and Regulatory Framework ■ Stock market details ■ Other markets where securities are traded ■ Local market administration organisations ■ Market entry requirements ■ Settlement ■ Safekeeping / Post settlement ■ Registration ■ Securities borrowing and lending / repos ■ Dividends / Income ■ Corporate actions ■ Cash management ■ Proxy voting ■ Taxation ■ Market charges ■ Payment systems ■ Banking and exchange holidays ■ G30 Compliance
Cash & Treasury Market Profiles Securities Market Information
1st Floor, 1 Farrier’s Yard, 77 Fulham Palace Road, London W6 8AH Tel: +44 (0) 20 8600 2300 | Email: [email protected] | thomasmurray.com
Thomas Murray Product OverviewCounterparty and Data Management Tool
Confirmation of benefits
Central information repository - covering bank counterparties, operational practices, and/or market side intelligence
Cost reduction - easily identify which accounts can be closed due to inefficient usage, duplication or redundancy
Increased efficiency - as all data, documents, account, and compliance information will be centrally managed in a more automated way
Data quality improvement - data and documentation held in a fully audited platform
Operational risk reduction - less administrative tasks, reduction in duplication of operations activities
Document storage - centrally store all documents in a more efficient and cost effective way. Easily share information across departments
Full integration - of all payment, volume, rebate, and pricing information giving you a fully compliant and transparent management overview
Increase transparency - across your correspondent banking and securities networks for regulatory compliance
Controlled access - at any level, both internally and externally, to banking clients direct via the bank’s own portal
Formalise policies - including a structure for the set-up, closure, and day to day maintenance of cash and securities accounts
If you are interested in Counterparty and Data Management Tools, please contact Derek Duggan:
Derek Duggan, [email protected] | +44 (0) 20 8600 2300
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