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Page last updated
February 15, 2003

 

 

I

"One for all - all for one":
A new dimension in securities operations?

"One for all; all for one" is a time-honoured and noble motto. But is it still relevant in our times? Looking back at the history of the securities industry, we find that most CSDs and ICSDs were indeed formed with this principle in mind. That said, it still comes as something of a surprise that the Swiss banks launched SEGA (1970) as domestic securities clearer and INTERSETTLE (1988) as a vehicle for the cross-border, international settlement of securities with a special focus on equities, with the aim of providing a shared solution for the Swiss financial centre; a solution the banks have consistently promoted since its inception. In so doing, the Swiss banks, who have been investing astutely worldwide on behalf of their private banking clientele for more than 100 years, have, earlier than most, breathed life into a European vision. SIS SEGAINTERSETTLE is the latest manifestation of this vision. Resulting from the SEGA; INTERSETTLE merger, it is now a dominant force in the European equities clearing community. The Swiss banks' investment, a master solution that embodies the spirit of "one for all; all for one," is now open to all market participants. Apart from the Swiss banks, the SIS clientele comprises a large number of international brokers and banks that are already profiting from the online, real-time securities settlement and custody services provided by the company. As a nonprofit organisation SIS channels the benefits derived from economies of scale and securities pooling back into the market in the form of innovative new services or price reductions.

Hardly a day passes in the world of banking without the announcement of new alliances or lively speculation about who's next in the race to merge. Whereas mergers traditionally used to be domestic "affairs," today's alliances are predominantly cross-border events. As such, the securities industry is far from immune to the current craze for joining forces. The European initiatives launched by the exchanges, the clearing houses and the settlement agents have been signaling such a trend for some time. In Europe, it is taken for granted that coalitions of this kind will help to further reduce costs while at the same time optimising service quality. "One for all; all for one"?

At the time of writing, a number of pan-European exchanges (virt-x and Euronext to name but two) are emerging that have made it their aim to trade at least a majority of all European blue chips. This clearly illustrates that soon at least two exchanges will be capable of trading a majority of European blue chips across most European countries, an escalation of the current situation. The fight for market share has erupted here. Bearing in mind that we still do not have the "United States of Europe," the complexity of processing these multiple-listed securities all over Europe represents a formidable challenge to brokers and banks as well as CSDs and ICSDs with regard to clearing and settlement. Propitiously for the industry, SIS SEGAINTERSETTLE, which is rooted in the Swiss financial centre, has identified this dynamic at an early stage and responded with fully automated solutions for all clients in the global environment, true to the motto "One for all; all for one." Why?

SIS SEGAINTERSETTLE combines the roles of bank, domestic CSD and ICSD for the settlement and custody of international securities. SIS' shareholders as well as its clients are committed to promoting one stop shopping and facilitating the outsourcing of today's entire custodian network to SIS. The settlement of transactions effected at different exchanges has now been simplified for the clients as they use one sole custodian, SIS. SIS' clients do not need to know the custodians; placing securities realignment and custodian management entirely in the hands of SIS leaves them free to concentrate on actual trading. SIS SEGAINTERSETTLE keeps globally over 60,000 securities in safe custody in more than 43 markets and is the sole ICSD capable of processing all conceivable kinds of securities in its system. Its basic services can be compared to those of global custodians. In addition to fully integrated online, real-time settlement and clearing functionalities, including automated securities lending and borrowing, SIS SEGAINTERSETTLE also provides high-quality services revolving around corporate actions and entitlement events as well as an advanced product for mutual and offshore funds business. Services such as proxy voting and tax reclaims are among its core competencies. The company supplies cash managers with online real-time cash and securities projections, account keeping in all currencies as well as the usual funds transfer functionalities. Last but not least, SIS gives its clients full access to the integrated repo platform. "One for all; all for one." Where do we go from here?

The Settlement Network (TSN) is a cooperation venture founded by SIS and CREST whose aim is to jointly safeguard and capitalise on earlier investments in infrastructures. As both SIS and CREST operate modern platforms based on real-time technology, nothing stands in the way of linking the two systems via a high-speed line. New developments will be based at a single locality depending on the core competencies involved. SIS' clients can hook into TSN services via a common user interface. TSN already holds around 50% of the Eurotop 300 market capitalisation today.

axion4gstp is the name of the alliance comprising SWIFT, Tata Consultancy and SIS, which is engaged in developing a Transaction Flow Manager for a market initiative of the GSTP Association. Here too, the company's prime concern together with its partners must be to gear the core competencies to the market's needs and to deliver a global solution, which would point the way forward for the securities industry at large. You could say that it brings the age-old maxim "one for all; all for one" to life again.

Marco A Strimer
Member of Senior Management
Head Customer Services and Sales
SIS SEGAINTERSETTLE



 


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