LuxCSD strengthens its issuance and distribution hub following appointment of fifth partner bank


The appointment of the fifth bank as LuxCSD Principal Agents (LPAs) has confirmed LuxCSD’s position as a significant distribution hub for newly-issued securities in Luxembourg’s financial sector.

LuxCSD, Luxembourg’s central securities depository, has now designated five banks as its LPAs – Banque et Caisse d’Epargne de l’Etat, Banque Internationale à Luxembourg, BNP Paribas Securities Services, Caceis Bank and Citi – to support the issuance process of domestic and international securities through LuxCSD. Issuers of securities inside and outside of Luxembourg can select and appoint one of the LPAs to ensure compliance with LuxCSD’s operations throughout the lifetime of the issuance.

Issuers will gain the advantage of distributing their securities in central bank money while benefitting from the extensive customer network of LuxCSD shareholder Clearstream which gives access to 2,500 financial entities worldwide. Settlement of securities issued in LuxCSD is either performed in EUR central bank money or other currencies in commercial bank money via cash accounts in Clearstream.

Pierre Thissen, Member of the Board of Directors of LuxCSD and Head of Market Infrastructure of the Banque centrale du Luxembourg, welcomed the appointments saying that LuxCSD would now become a hub for issuing securities in EUR central bank money and would cover all types of instruments including dematerialised securities.

“We are pleased that five main players of the Luxembourg financial centre and beyond have agreed to provide access to LuxCSD’s distribution hub for issuances,” he said. “Issuers benefit from the single point of access to a broad range of counterparties globally while issuing in central bank money and can also take advantage of Clearstream’s counterparty reach and a consolidated liquidity pool.”

Patrick Georg, General Manager LuxCSD, said the appointment of five LPAs and the recent ECB approval to use LuxCSD in Eurosystem monetary policy operations were important milestones for the institution enabling it to be fully equipped to handle issuer and investor CSD activity in Luxembourg and internationally.“I am particularly satisfied that such prestigious actors of the financial market have added LuxCSD based issuance to their capabilities thereby enhancing their offering for issuers,” he said. “This is clearly a sustainable solution that guarantees the availability of such securities in the future environment with TARGET2-Securities.”

LuxCSD provides the Luxembourg financial community with EUR central bank money settlement services as well as issuance and custody services for a wide range of domestic and international securities including investment funds. The CSD fully supports dematerialised securities as these will significantly reduce inefficiencies, risks and costs for the industry. LuxCSD can also advise issuers in dematerialising existing physical securities.

About LuxCSD

LuxCSD is jointly (50/50) owned by the Banque centrale du Luxembourg (BCL) and Clearstream International S.A. LuxCSD offers custodians and distributors across Europe excellent custody and added value services built on a highly efficient settlement process with access to many counterparties. Settlement of securities transactions in central bank money reduces risk for financial market participants.

The company was created in July 2010 within the context of the future implementation of the Eurosystem’s TARGET2-Securities (T2S) initiative. LuxCSD will provide the Luxembourg financial market infrastructure with a national access point to T2S and so will enable Luxembourg market participants to reduce their settlement risks as delivery versus payment (DVP) settlement in central bank money is widely recognised as the safest way to achieve securities settlement. This is an important factor in helping the Luxembourg market to remain competitive as a financial centre once the new European settlement infrastructure
is established.

Following completion of its technical implementation in September 2011, LuxCSD was designated a Securities Settlement System by the Luxembourg central bank in October 2011. This is a requirement to operate under the protection of the Settlement Finality Directive and LuxCSD has been fully operational since then. The company’s commitment in May 2012 to join TARGET2-Securities marked another milestone in the young life of the Luxembourg CSD. In March 2013, LuxCSD has received approval by the European Central Bank (ECB) for its Securities Settlement System (SSS) being eligible for use in the collateralisation Eurosystem credit operations.

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