Clearing the way for a Euro-market

It’s been said that securities settlement, like plumbing, is only noticed when it doesn’t work.

It’s been said that securities settlement, like plumbing, is only noticed when it doesn’t work. Last month saw a notable exception. Pierre Francotte, the 45-year-old CEO of Brussels-based Euroclear Bank, attracted plenty of notice by pulling off a merger that brings a single European market for trading, clearing and settling bonds and equities a lot closer. “This deal helps remove some significant obstacles,” says the Belgian lawyer.

By linking up with the U.K.'s central securities depository, CrestCo, Francotte has created a new entity -- Euroclear-Crest -- that on paper settles 60 percent of the equities in the Eurotop 300 index, 52 percent of the bonds traded in domestic European markets and 62 percent of Eurobonds.

The merger should make the European capital markets more competitive. “By cracking cross-border settlement, you can take out half of the costs involved in cross-border trading,” points out Francotte.

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