LuxCSD to cut custody fees for equities
As part of LuxCSD’s initiative to support the dematerialisation of securities of all types, LuxCSD announces custody fee cuts for equities by 50%, effective from 1 April 2014. This fee reduction results in an alignment of the equity and bond custody fees.
The aim is to encourage corporations to dematerialise existing physical securities and to newly issue securities in dematerialised form. Custody of equities in dematerialised form significantly reduces inefficiencies, risks and costs for the industry and increase the level of transparency regarding the chain of holders of a Luxembourg security.
In March 2014, LuxCSD has successfully handled its first dematerialisation of physical shares - the BIP Investment Partners Luxembourg equities with a volume of EUR 400 million.
Patrick Georg, General Manager of LuxCSD, said: “By cutting the custody fees for equities by 50% we aim to attract more corporates to dematerialise physical shares and to follow the example of BIP Investment Partners. We strongly support dematerialisation as best practice in securities custody and issuance.”
The change in Luxembourg law governing the dematerialisation of physical securities adopted in April 2013 is expected to further enhance the appeal of securities issued and dematerialised in Luxembourg.
About LuxCSD
LuxCSD is jointly (50/50) owned by the Banque centrale du Luxembourg (BCL) and Clearstream International S.A. LuxCSD offers custodians and distributors across Europe excellent custody and added value services built on a highly efficient settlement process with access to many counterparties. Settlement of securities transactions in central bank money reduces risk for financial market participants. The CSD fully supports dematerialised securities as these will significantly reduce inefficiencies, risks and costs for the industry. LuxCSD can also advise issuers in dematerialising existing physical securities.
The company was created in July 2010 within the context of the future implementation of the Eurosystem’s TARGET2-Securities (T2S) initiative. LuxCSD will provide the Luxembourg financial market infrastructure with a national access point to T2S and so will enable Luxembourg market participants to reduce their settlement risks as delivery versus payment (DVP) settlement in central bank money is widely recognised as the safest way to achieve securities settlement. This is an important factor in helping the Luxembourg market to remain competitive as a financial centre once the new European settlement infrastructure
is established.
Following completion of its technical implementation in September 2011, LuxCSD was designated a Securities Settlement System by the Luxembourg central bank in October 2011. This is a requirement to operate under the protection of the Settlement Finality Directive and LuxCSD has been fully operational since then. The company’s commitment in May 2012 to join TARGET2-Securities marked another milestone in the young life of the Luxembourg CSD. In March 2013, LuxCSD has received approval by the European Central Bank (ECB) for its Securities Settlement System (SSS) being eligible for use in the collateralisation Eurosystem credit operations.
Further information: www.luxcsd.com