new generation of processing environment october 2008 jan willems
TRANSCRIPT
New generation of processing environment
October 2008
Jan Willems
Page 2
October 2008
Agenda
Interoperability
Functional solution
Requirements
Summary
Internal settlement
Page 3
October 2008
… with quick time to market
… in partnership with the best local providers
… avoiding migrationcost for the market
Market developments drive service objectives for new generation lifecycle
Friction-free service throughoutfull lifecycle
Maximised control of cash and securities at any time
Seamless interoperability toavoid fragmentation of liquidity
Full integration of securities financing and asset servicing
Page 4
October 2008
Agenda
Interoperability
Summary
Functional solution
Requirements
Internal settlement
Page 5
October 2008
Clearstream’s existing processing environment
Previous settlement engine was designed and deployed to achieve scale and optimisation
Quality was evidenced in its night time efficiency, processing over 90% of the volume
The old 15 batch daytime deployment leveraged our competence in optimisation
Whilst delivering optimal efficiency, it reached its limits to meet evolving customer requirements
Queuing times for feedback of internal, bridge and external settlement
Suboptimal deadlines
Page 6
October 2008
The solution: proven settlement infrastructure with strong optimisation functionalities…
The full set of settlement optimisation functionalityis working in real-time from 04:30 to 18:00 CET
Securities and cash netting Optimises settlement efficiency and throughput
Self-collateralisationon stock and flow
Assists in the funding of own purchase
Money Purchase LienSupports higher trading velocity with less collateralised credit
Fails lendingMaximises settlement efficiency and reduces the risk of fails
SequencingEnables you to prioritise and control your settlement
ProvisioningMinimises domestic market turnaround times while recognising a collateral provision to support other settlement
Automated collateral allocation and substitution engine
Optimises use of securities as collateral for refinancing activities
Page 7
October 2008
…combined with end-to-end real-time instruction life cycle
End-to-End fully ISO 15002
Instruction
validation
For internal
instructions
For domestic
instructions*
Real-time feedback
on best matching
allegement**
30 matching
exchanges for
Bridge instructions
Release for
provisioning
during
settlement
window
Customer query
and SWIFT status
on settled and
pending
transactions
Cash balances
and anticipated
net balance
projections
Credit usage and
collateral
availability report
3 night-time
processing (NTP)
batches
Optimised real-
time daytime
settlement
processing from
04:30 to 18:00
CET
Validation Matching Provisioning
Input ISO 15022
OutputISO15022
ReportingSettlement
* where the market infrastructure offers pre-matching
** for markets with binding matching
Real-time processing
Page 8
October 2008
Why do we call it a new generation of processing environment and not just a settlement engine?
Internal settlement
Treasury & securities financing
Domestic market and bridge
interoperability
Asset servicing
…because life cycle performance drives the overall service portfolio
Optimised real-time lifecycle
Page 9
October 2008
Agenda
Interoperability
Summary
Functional solution
Market trends and requirements
Internal settlement
Page 10
October 2008
Extended daytime settlement from 4:30 to 18:00 CET in real-time and without any bottlenecks
5 minute turnaround for internal transactions
Accelerated settlement without queuing times
Improved settlement efficiency thanks to earlier feedback and better fails management
Higher trading velocity supported by the same assets
Unique combination of end-to-end real-time life cycle and optimisation deliver tangible benefits
Increased Speed
Permanent Optimisation
Greater Efficiency
Internal settlement
Page 11
October 2008
Agenda
Interoperability
Summary
Functional solution
Market trends and requirements
Internal settlement
Page 12
October 2008
Investor /Intermediary
All benefits of using local agents combined with ability to settle in multiple markets worldwide through single window
Clearstream
Local agent
CSD
Local agent
CSD
Local agent
CSD
30 min turnaround
time*
Deadline objective:15 min prior to
local market deadline
Single point for funding
Single point for control
* where local market infrastructure is real-time
Value-added services
Interoperability
Page 13
October 2008* for against payment transactions only, time in CET
Settlement deadlines in core European markets converging towards objective during H2 2008
MarketOld
deadline*
New
deadline*
Market deadli
ne*
Austria SD 14:45
SD 15:35
SD 15:50
Belgium SD 14:45
SD 15:00
SD 15:15
France SD 15:00
SD 15:45
SD 16:00
Germany SD 12:30
SD 12:55
SD 13:15
Italy SD 15:00
SD 16:15
SD 18:00
Netherlands
SD 15:30
SD 15:45
SD 16:00
Spain SD 12:45
SD 14:10
SD 15:00
Switzerland (CHF)
SD 13:00
SD 13:25
SD 14:30
UK Crest SD 14:00
SD 14:25
SD 15.00
In addition to the above markets, we are improving our settlement deadlines in 27 other markets and our cash deadlines for 26 currencies.
Interoperability
Page 14
October 2008
Euroclear Bank
The bridge has seen radical improvements in recent years
Input deadline Bridge instructions, processing for value SD
20:30
* Input deadline times expressed in CET
Input deadline Mandatory Bridge
settlement
13:00
Input deadlineOptional Bridgesettlement (DVP)
15:00
Mandatory Settlement period Optional Settlement period
Clearstream Banking22:00
23:30
01:00
02:30
04:00
Input deadlineOptional (FOP)
16:00
2003 2004-2006
24 settlement exchanges between 06:00 and 18:00
Night-time processingSD-1 SD
Real-time day-time processing (04:30-18:00)
Interoperability
05:00
2007 2008
14 settlement exchanges between 08:00 and 17:40
8 settlement exchanges between 08:00 and 16:00
Page 15
October 2008
Since July 2008Past
Mandatoryinstructiondeadline
Optionalinstructiondeadline
Number ofmatchingexchanges per day
Number ofsettlementexchanges per day
Continuous improvement of bridge interoperability - new milestone since July 2008
12:30
14:45
20
10 per ICSD
13:00Compared to internal deadline at EB of 13:30 and CBL of 14:00
15:00(+ FOP deadline 16:00)
30 (almost every 15 minutes throughout day)
15 per ICSD
Interoperability
Page 16
October 2008
The new Bridge: Changing your perception
Daytime Bridge : an effective infrastructure for secondary market settlement
Settlement efficiency rates over bridge are now equal to internal transactions
Quality of ICSD settlement engines and number of instructions exchanges ensures that the most complex chains of transactions are always resolved
To ensure that the Bridge is sufficiently robust to support evolving market needs, we need to maintain the pace of progress
Joint effort with Euroclear to make continuous improvements to the infrastructure so we eliminate all bottlenecks
Push for full interoperability
Interoperability
Future aim to maximise same-day financing and settlement possibilities and to introduce interoperability between the triparty repo systems of the ICSDs
Page 17
October 2008
Agenda
Interoperability
Functional solution
Market trends and requirements
Summary
Internal settlement
Page 18
October 2008
Tangible benefits for you
Lifecycle real-time from end-to-end (from instruction validation to reporting) without any bottlenecks
Strong benefits for you through the integration of real-time processing and asset optimisation throughout the day time settlement period
Maximised control and availability of cash and securities at any point of time, supporting greater level of trading activity
Enhanced settlement efficiency
Greater opportunity to re-use settlement results
Less concentration of credit and collateral use Real-time interaction with securities financing, including substitution
and auto-assign
Page 19
October 2008
The best model for interoperability, only limited by external factors but not by us
All the benefits of using a local agent combined with the ability to settle in multiple markets worldwide through a single window
Significant service level improvements for core markets in partnership with our domestic providers
New processing infrastructure is ready for real-time, message-based bridge
Solution is available now, at no migration cost andwithout any interface and processing changes