Euroclear reports strong 2017 first half

Euroclear has reported that in the first half of 2017, client assets held in safekeeping increased to EUR
28.4 trillion and the group processed securities worth a total value of EUR
369 trillion. Collateral outstandings reached record levels with a total of EUR 1155 billion
on Euroclear’s Collateral Highway in June 2017, up 14% from the previous
year.

The key operating results for the group, for the first half of the year, include
the following figures, compared to last year:

  •  Value of securities held on behalf of Euroclear clients, increased by 5%
    to EUR 28.4 trillion
  •  Turnover, the value of securities transactions processed, up by 14% to
    EUR 369 trillion
  •  The number of netted transactions settled in the Euroclear group rose by
    11% to 107 million
  •  The number of daily collateralised transactions mobilised by Euroclear’s
    Collateral Highway was up 14% to EUR 1155 billion
  •  Fund assets under custody increased 15% as Euroclear progressed its
    funds strategy

Lieve Mostrey, Chief Executive Officer of the Euroclear group, commented:
“Financial market conditions have been supportive to date, with record levels
of client activity, and we reached record levels of collateral outstanding on
our Collateral Highway. Euroclear is accelerating its investments in both regulation-driven initiatives
and cyber security, while continuing to develop its offering for clients
globally.”

Euroclear’s strategic vision is to remain a partner for the global
capital markets, by providing services that improve efficiency of the world’s
financial markets and meet specific client needs.
To this end, the group’s focus is on strengthening its traditional business in
Europe; progressing its growth initiatives in collateral, funds and in
international markets, while also exploring adjacent opportunities enabled by
data and new technology, such as blockchain.

Investing in Euroclear’s European Core

As planned, the group has stepped-up investment in its European core,
further strengthening the safety of financial markets by attaining compliance
with CSDR and through advanced cyber security capabilities.
Meanwhile, Euroclear’s ambition to become the gateway to European
markets connected to T2S is making headway. Just a year after joining T2S
in September 2016, Euroclear’s ESES CSDs will offer direct access to six
major T2S markets (Belgium, France, Germany, Italy, Netherlands and
Spain) as either issuer or investor CSD, across eligible asset classes
including equities, fixed income securities, and domestic funds and ETFs.

Progressing growth initiatives

Euroclear is partnering with industry participants to meet the financial
market’s need for innovative collateral management services.
Notably, the joint venture with the DTCC, GlobalCollateral Ltd, continues to
gain momentum with considerable client interest around its new Inventory
Management Service (IMS), a transformative solution that enables market
participants to seamlessly mobilise securities from the DTC to Euroclear
bank for use as collateral. The service was launched during the first half
2017.

In addition, the group signed a partnership with Elixium, part of the Tradition
group, to develop a new European collateral exchange. This innovative offer
will be easily accessible through Elixium’s electronic platform, providing
access to new participants, such as the buy-side, and improving efficiency of
the collateral marketplace.

Euroclear continues to progress its strategy to develop FundsPlace, its
vision of a relevant and industry-specific market infrastructure for funds. By
doing so, FundsPlace opens new opportunities, such as to leverage funds
and ETFs for collateral management. Further progress was made in the
international exchange-traded funds (ETF) sector where the trends of
globalisation and the rise of passive management have driven a 30% annual
increase in deposits since 2014.

As an open, neutral infrastructure, Euroclear also has a role to play in
bringing all financial market participants together to develop innovative
solutions for the public good. For example, Euroclear has launched a new
working group in France – with the full backing of industry bodies – to
explore how the model for the distribution of funds can be further enhanced.
International investors are increasingly seeking efficient access to growth
economies. Through its Global Capital Markets initiative, Euroclear
collaborates with markets in Asia, Latin America Middle East and Africa to
develop ‘Euroclearable’ markets that address the international investors’
needs.

Substantial progress has been made in Latin America in 2017, where we
have been helping support the growth ambitions of the MILA economies and
others in the region, resulting in Chile and Argentina, issuing ‘Euroclearable’
local currency. In both cases, foreign investors’ capital inflows increased by
over 20% with the countries also receiving a higher weighting in several
world bond indices.

The Peruvian Ministry of Economy and Finance has also embarked into 2
years of local reforms in order to issue its first ever "euroclearable" bonds by
end July 2017.

Partnering to explore new technology solutions

The group is exploring a number of other areas of innovation such as its new
partnership with Quantessence, a UK-based fintech company.
Quantessence delivers an open architecture platform that manages the
running of predefined asset allocation algorithms. The first application on the
platform will offer a service for iCPPI products, a strategy used in risk
management.

Euroclear is also one of seven founding shareholders of the a new fintech
venture, Liquidshare, which will develop applications using blockchain
technology to make post-trade operations more efficient for small and
medium enterprises in Europe.