2011 Agent Banks in Major Markets Survey - Clearstream

TM
2011
Agent Banks in
Major Markets
Survey

Clearstream
Reprinted from Fall 2011
D C
LEADING CB/NA
Beside an agent bank, Clearstream looms large as asset holder
($8.4 trillion), processing factory (116.4 million transactions last
year) and network manager (52 markets). It also provides financing
services of a kind no agent bank can match. “Very big strength of
Clearstream,” writes a user. “Enables you to utilize your assets effectively
through collateral management, using flexible and robust applications
and online reporting tools.” Certainly Creation helps the
ICSD collect terrific scores for IT and reporting. A client describes it
as “very effective and useful.” But CBL prides itself on high-touch as
well as high-tech. “It is a real pleasure to work with this ICSD,” says
a client. Getting the balance between efficiency and service right
is not easy. What works for some (“Very proactive/flexible, create
bespoke solutions. Very efficient, good value for money”) irks others
(“Avoid making decisions without taking into consideration the
impacts for their clients”) and creates risk. “Clearstream is a welloiled
machine,” says a client. “[But] when the wheels come off, they
come off in a spectacular fashion. Clearstream needs to be more
flexible in its offering.” Comments suggest dissatisfaction with corporate
actions (“Long turnaround times”), but only tax reclaims,
where the ICSD does not cover all markets and avoids protracted
claims, looks truly problematic. “Tax refund department weak
due to lack of manpower,” says a client, but even he is countered:
“Assists in providing information where we qualify for tax relief,
ensure documents logged expeditiously against account and help
in the resolution of claiming tax relief where wrong amounts received.”
The commonest complaint is price. “Every slightest service
is paid,” as a client puts it. But CBL will reckon it is well placed for a
future in which infrastructure, especially in a post-T2S Europe, will
lord it over the custodian banks. “The competition between CBL
and Euroclear Bank has always been very strong,” predicts a client.
“The upcoming merger of Deutsche Börse and NYSE Euronext will
strengthen the position of CBL, and as such we believe we are connected
to the winning camp.”
Best in Class (�)
Value &
Commitment
Client
Service Reporting
Corporate
Actions
ICSD
Proxy
Voting Cash & FX
Euroclear Bank
D C
LEADING CB/NA
There is praise for the human side of Euroclear (“Willing to listen
and take feedback on board”), but if the Brussels-based ICSD still
has the edge over its rival in terms of size ($15 trillion) it has yet
to claim the affections, as opposed to the admiration, of its clients.
However unfairly (“Our new RM worked very hard in 2010 to improve
the relationship”) corporate personality is still the primary
reason it trails CBL in every area. Comments are replete with references
not to people but to a “professional and efficient” organization
and a “reliable settlement service.” Euroclear should be judged
by more than its ability to settle trades, and it can match CBL in
securities financing and fund servicing. “Provides a wide range of
services, and they have improved their services significantly over the
last year, above all on the FundSettle side,” writes a client. “They
have strengthened their focus on client services and expanded their
flexibility to offer customized services.” The ICSD is now turning
its attention to unblocking obstacles to efficiency in asset servicing.
The Tax Genix service lifts the score in tax reclaims. “Tax team has
been helpful in complex Italian withholding tax issues,” says a client,
though another grumbles he has to “go back and clarify what
it is they are advising.” There are mixed views on corporate actions
too, though these are bound to challenge an ICSD holding multiple
securities. “First-class service” says one, while another criticizes “follow-up
with agent banks.” Views are similarly bifurcated on proxy
voting. But if views are divided, average scores are up. Euroclear is
listening, and changing.
SIX Securities Services
C
CB/NA
The smallest ICSD ($829 billion in international assets) is ambitious.
No longer content to be judged by high efficiency or low
prices, it has added sales staff and RMs, revamped their roles and
competes with custodians and ICSDs in network, financing, clearing,
settlement and custody. “New hires in relationship management
are showing their quality,” says a client. “Early days, but a
welcome improvement has begun.” With its in-house CCP, membership
of Link Up Markets and a proposed interface to T2S, SIX
grasps the infrastructural opportunity. “Difficult to see the strategy
with so much change coming,” says a client. “[But] beginning to
see a more dynamic, client-facing organization emerging.” Scores
are up sharply this year. Only those for stock borrowing (where it
offers a tri-party as well as a fails service), tax reclaims (where the
SIX service is limited) and proxy voting (in which its role in Switzerland
is restricted to bearer shares) suggest cause for concern.
Income
Collection
Tax
Reclaims
AGENT BANKS IN MAJOR MARKETS SURVEY
= Leading Top Rated = Leading Commended = Top Rated = Commended = Domestic Top Rated = Domestic Commended = Unrated = Not Rated
Sec Borrow/
Lending Settlement
Account
Management Technology Total
LEADING CLIENTS
Clearstream � � � � � � � � � � � � 5.38
Euroclear � � � � � n/a � � 5.30
Leading Local 5.53 5.37 5.52 5.22 5.00 5.18 5.33 5.12 5.30 5.43 5.39 5.56 5.33
Leading Global 5.35 5.32 5.32 5.20 5.25 5.14 5.27 5.09 5.07 5.38 5.30 5.37 5.25
CROSS-BORDER/NON-AFFILIATED
Clearstream � � � � � � � � � � � � 5.63
SIX � � � � � � � � � � 5.61
Euroclear � � � � � � � n/a � � 5.45
CB/NA Local 5.71 5.68 5.67 5.48 5.37 5.50 5.61 5.38 5.39 5.65 5.56 5.82 5.57
CB/NA Global 5.48 5.51 5.46 5.35 5.35 5.35 5.43 5.30 5.35 5.54 5.43 5.55 5.42