LuxCSD, the new central securities depository for Luxembourg, is now open for business. After completion of the technical implementation in September 2011, LuxCSD has now been designated Securities Settlement System by the Luxembourg central bank which is required to operate under the protection of the Settlement Finality Directive. LuxCSD now provides the Luxembourg financial community with central bank money settlement services as well as issuance and custody services for a wide range of securities including investment funds. LuxCSD is a 50/50 joint venture between the Banque centrale du Luxembourg and Clearstream International.
Mark Gem, Chairman of the Board of Directors of LuxCSD and Head of Business Management at Clearstream, said: “The development of TARGET2-Securities, coupled with other market and regulatory initiatives, was the key driver for introducing central bank money settlement in Luxembourg. LuxCSD allows seamless interoperability with Clearstream’s international market and will provide the Luxembourg financial community at a later stage with a gateway to T2S. LuxCSD will be the hub for issuing securities in Luxembourg, covering all types of instruments, including investment funds. LuxCSD builds its service range on Clearstream and therefore offers a deep service capability.”
Pierre Thissen, Member of the Board of Directors of LuxCSD and Head of Market Infrastructure of the Banque centrale du Luxembourg, said: “The goal of LuxCSD is to provide securities settlement in central bank money in Luxembourg and across the Eurozone. Delivery versus payment (DVP) settlement in central bank money is widely recognised as the safest way to achieve securities settlement. LuxCSD will therefore contribute to lowering settlement risk. The Luxembourg financial center is, historically and because of its place at the heart of Europe, very much cross-border oriented. While domestically rooted in Luxembourg, LuxCSD will be oriented towards the entire Eurozone and beyond and will naturally link to TARGET2-Securities when it is implemented.”
Patrick Georg, General Manager LuxCSD, said: “After several years of intense work with and for the Luxembourg market, we have now reached a major milestone with the go-live of LuxCSD. Given the scope and quality of its services, I am confident that LuxCSD will provide its customers in Luxembourg and throughout Europe an access which is second to none to the Eurozone markets and in the future to TARGET2-Securities.”
LuxCSD is covering the following service range:
- Securities settlement in central bank money: LuxCSD offers delivery versus payment (DVP) settlement services in EUR central bank money as well as free of payment (FOP) settlement between LuxCSD counterparties and against Clearstream Banking Luxembourg counterparties. In addition, FOP settlement with counterparties in more than 50 domestic markets is possible.
- General issuance services: LuxCSD supports the issuance, settlement, asset servicing, and safekeeping of Luxembourg-issued securities. An efficient issuance process, which meets international standards, has been designed together with the LuxCSD principal agents.
- Issuance services for funds: LuxCSD acts as a centralised facility for the issuance and settlement of investment funds domiciled in Luxembourg or in other countries, in close cooperation with the related fund agents, but is no substitute for transfer agents.
- Asset servicing: Standard custody services include the handling of exchanges, income and redemptions, corporate action events. Comprehensive custody services are available to customers for securities accepted and held by LuxCSD. They include collection of coupon and dividend payments, collection of principal, exercise of rights and warrants as instructed by the customer, tax and proxy voting services.
- Reporting and connectivity: Reporting and online connectivity in ISO 15022 will be available via the CreationConnect suite of products. ISO 20022 will also be supported for the routing of fund orders.