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EuroCCP Launches Clearing and Settlement for Depositary Receipts

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European Central Counterparty Limited (EuroCCP) today announced that on 16 October it will begin clearing and settling 120 of the most heavily traded listed depositary receipts. With its new central counterparty 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, by appointing the firm as EuroCCP’s settlement agent for these instruments.

In addition to clearing a wide selection of depositary receipts in Europe, EuroCCP’s service will stand out by providing most convenient settlement location. Initially all transactions will settle at Euroclear Bank. Some 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.

Commenting on EuroCCP’s new depositary receipts service offering, 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 cooperation 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 3 euro cents per side (€0.030) and falling to one-fifth of euro cent (€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.

According to Tom Isaac,Global head of client and sales management for financial intermediaries, Citi: “Citi is extremely pleased to continue to build its relationship with EuroCCP to include the settlement of depositary receipts. This appointment reflects Citi’s ongoing commitment and ability to support the needs of central counterparties in this region. We look forward to continuing to work with EuroCCP as it expands its clearing capabilities into new instruments and markets.”

Depositary receipts are transferable securities that represent ownership of a specified number of shares in a foreign company. Listed and traded independently from the underlying equity, depositary receipts enable traders to invest directly in high growth economies in an easy and cost effective way. They comprise a significant segment of the international securities markets business today.

The new service marks the latest addition to EuroCCP’s ongoing programme of innovation, which includes a significant restructuring of fees and expansion into further financial instruments and market sectors. EuroCCP, which currently clears and settles trades for four MTFs, in January 2010 will extend its services to the national exchanges owned by Nasdaq OMX in Denmark, Finland and Sweden.

Effective 1 October, EuroCCP implemented a new, tiered fee structure that leverages the company’s economies of scale to deliver Europe’s most competitive pricing. Volume discounts are calculated at the participant level, which provides significant value to high frequency trading firms now operating across multiple markets.

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