Clear Stream Banking Review 2021 – that will be the topic of today’s article.
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Clearstream is a post-trading service provider owned by Deutsche Börse AG. It provides settlement and custody and other related services for securities across all asset classes. It is one of two European international central securities depositories (the second is Euroclear).
Clearstream operates securities settlement systems based in both Luxembourg and Germany, which allow securities to be stored and transferred.
Clearstream operates its International Central Securities Depository (ICSD) from Luxembourg. It is also a joint partner of the Luxembourg Central Securities Depository (CSD) LuxCSD together with the Luxembourg Central Bank. In Germany, Clearstream operates the German central depository Clearstream Banking AG. Clearstream has connections with over 50 domestic markets around the world and issues and holds Eurobonds.
In 2014, the value of assets held in custody on behalf of clients averaged € 12.2 trillion; In addition, Clearstream processed 43.65 million ICSD settlement transactions and 82.68 million CSD transactions.
Clearstream has approximately 2,500 customers in 110 countries. Clearstream accepts AML regulated central banks and lending institutions as clients. Clearstream does not accept individuals as customers and no accounts are opened in the name of an individual. Therefore, Clearstream is called the “bank for the banks”.
The entire financial system of the world is built on trust. When trading assets, both parties need to be sure that they receive their share of the transaction. Given the complexity, speed, and number of assets involved, a fast, secure and reliable third party is absolutely essential to conduct transactions.
Clearstream is a leading European post-trading provider. The wholly-owned subsidiary Deutsche Börse ensures fast and efficient delivery of funds and securities between trading parties. The company also manages, stores, and manages the securities he holds on behalf of his clients. Over 300,000 domestic and international bonds, stocks, and mutual funds are currently listed with Clearstream.
Clearstream maintains customer relationships in over 110 countries. Its global network covers 58 domestic markets. Backed by flexible securities lending and collateral management services, Clearstream offers one of the most comprehensive international securities services available, executing over 250,000 transactions per day.
Clear Stream Products and Services
Clear Stream offers its clients a wide range of different products and services, let’s overview each service.
The OneClearstream service level refers to the company’s new agreed services for Clearstream Banking Frankfurt as the German CSD; Clearstream Banking Luxembourg as international CSD (ICSD) and LuxCSD as Luxembourg CSD – now available to customers through a single interface and authorization. Clients can access all three CSDs through a single integrated platform.
By consolidating all T2S eligible assets into Clearstream, the largest T2S member, customers benefit from unique economies of scale and netting capabilities. Full 3-way CSD and ICSD compatibility will allow for improved liquidity and collateral management as outlined in our OneClearstream communications.
Clearstream is responsible for the management, custody, and administration of the deposited securities. Services include mailing and processing of settlements for new issues, payment of income and redemption, corporate actions, tax and proxy voting services, and custody services.
Asset Management Services Overview
As part of the Deutsche Börse Group, Clearstream is supported by a high-quality organization with a strong financial standing and excellent credit ratings. The company’s custody services combine the safe and secure storage of assets with industry-leading event management support.
The International Central Securities Depository (ICSD) Clearstream, located in Luxembourg, provides custody services for Eurobonds and other instruments in 58 domestic markets around the world, as well as international securities markets.
The German Central Securities Depository (CSD), located in Frankfurt, offers its clients the service of holding their securities in collective safe custody.
Clearstream continually improves the quality of these processes and their standardization. They have invested in further improving the throughput rate and reducing the burden on the clients’ back offices. Clients benefit from:
- Comprehensive services for new releases
- Timely and accurate income and ransom payments
- Proactive tax services for both source exemption and refund
- Effective notification and processing of corporate actions
- Flexible proxy voting service
- Revenue and corporate action lifecycle via SWIFT and online tools
- The leading communications suite supporting exception management through the Xact Web Portal and CreationOnline.
As the pace of innovation in financial products accelerates and the number of types of security increases, there is an additional element of complexity that securities service providers must consider. Clearstream’s understanding of this complex area means that they can provide the highest quality service that meets the highest industry standards.
Income Processing Overview
As emission levels continue to rise, so does the volume of revenue-related events. The complexity of the product is also increasing, due primarily to innovations in the sales area, and with them the problems associated with the complexity of servicing revenue. Timeliness, accuracy, and quality of service are key requirements; and our sophisticated, all-inclusive revenue-generating package enables our highly professional teams to respond quickly to these trends and thus to the needs of our customers.
Accuracy of payment
ClearStream has a high level of payment accuracy and our revenue turnover rate continues to decline despite significant growth in payments in recent years.
Overall, the company’s average pay rate for accuracy is over 99.5% for all events, despite the ever-increasing volume, with a record return of just 0.22% in the international market last year.
Cash and banking services
Clearstream Banking Services simplify liquidity management and give customers complete control over their funds 24 hours a day, 7 days a week. Getting an instant overview of cash positions and using predefined credit lines ensures maximum liquidity during periods of peak demand or unpredictable market events.
Cash and banking overview
Whether you have accounts with the Clearstream International Central Securities Depository (ICSD), the Clearstream Central Securities Depository (CSD), or both, Clearstream Cash and Banking services are designed to maximize your available liquidity and provide financing for settlements on your transactions globally. For CSD positions, central bank money is accessed through self-sustaining securities settlement. For ICSD positions, this means self-sustaining transactions; maximizing liquidity through secured credit lines and efficient use of commercial bank money; and optimizing collateral through umbrella accounts and access to central bank collateral at night. But the real value of cash and banking services lies in ensuring that liquidity flows seamlessly between ICSD and CSD environments.
Clearstream offers a wide range of solutions to handle foreign exchange (FX) transactions and efficiently support clients’ investment transactions across multiple markets. To assist central banks, Clearstream specifically designed its banking services to support their foreign exchange portfolio management activities.
Accuracy and timeliness of providing information to customers are key elements of a high-quality service. Clearstream’s robust suite of products provides real-time access to instruction statuses, cash and securities positions, corporate action alerts, and the latest market information.
Clearstream’s comprehensive real-time collateral management, lending, and borrowing services are merged into the Global Liquidity Hub. Its open architecture provides a vast pool of liquidity through links to agent banks, trading platforms, clearing houses, and market infrastructure.
Investment fund services
As a dedicated sub-custodian, Clearstream provides state-of-the-art solutions to standardize fund handling and improve efficiency and security in the investment fund sector. The company’s Vestima global fund processing platform provides access to all types of funds, from mutual funds to ETFs and hedge funds.
Clearstream’s Global Issuer Hub is a one-stop securities issuing solution that spans the entire securities lifecycle. The company’s tailor-made services, extensive liquidity pool, and extensive investor network help issuers find investors around the world at a minimum funding cost of nearly 100 currencies.
Clearstream provides accurate settlements for global and international securities as well as domestic securities traded abroad. Trades for selected stock exchanges/instruments are also automatically forwarded to them. The company’s secure, end-to-end processing is efficient, virtually risk-free, and done in real-time.
In addition to the issuer and CSD franchise, Clearstream maintains a large number of connections with the cash and securities markets around the world, providing direct and secure access to the largest domestic liquidity pools. They are constantly expanding the global network and offering market access solutions.
Clearstream serves all types of financial instruments, from simple fixed-rate debt instruments to complex structured products. With its innovative and flexible solutions, Clearstream is also a preferred supplier in less mature segments such as commodities and carbon.
Clients can settle a wide variety of securities at Clearstream, including:
- Fixed income securities: global bonds, foreign bonds and eurobonds, domestic bonds (government and corporate), treasury bills and bills, medium and short-term bills, commercial paper, certificates of deposit, convertible bonds, debentures devoid of coupons and principal debt, stock-related bonds
- Secured bonds, asset-backed securities and other collateralized debt securities
- Shares: preferred shares, standard shares
- Depositary receipts and depositary receipts (debts and shares)
- Investment funds
- Rights: rights, guarantees
- Structured products.
The 114 currencies are currently accepted by the company’s International Central Securities Depository (ICSD). Currency can be “fully settlement” or “denominational only”. The denomination currency is the actual currency in which the instrument is issued, but not necessarily settled. For example, an issuer in Costa Rica may issue a bond in their local currency (CRC), but the redemption and settlement activities are in US dollars.
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