Settlement organisations to automate messaging for Euro Medium-Term notes
DTCC, Euroclear and Clearstream together bring greater efficiency and security […]
March 11, 2009
DTCC, Euroclear and Clearstream together bring greater efficiency and security to MTN Market
The Depository Trust & Clearing Corporation (DTCC), Clearstream Banking and Euroclear Bank announced on March, 11th that they are expanding the scope of the European Pre-Issuance Messaging (EPIM) system to support the growing Euro Medium-Term Note (MTN) market. EPIM will now automate the pre-issuance communication and International Security Identification Number (ISIN) allocation process for Euro MTNs. The Euro MTN market has grown 22% over the past two years, from US$6.4 trillion (€5.0 trillion) outstanding in early 2007 to US$7.8 trillion (€6.1 trillion) in early 2009.
The European Pre-Issuance Messaging (EPIM) system, officially launched in May 2002, was developed in close collaboration with various dealers, IPAs and trade associations that have in-depth knowledge about the market’s needs. It is based on the proven pre-issuance messaging architecture of a service developed and launched in the U.S. by DTCC in 1999. On behalf of Clearstream Banking and Euroclear Bank, DTCC is the licensed service provider that operates and manages the actual messaging hub.
EPIM is being used in a similar capacity within the European Commercial Paper (ECP) and Euro Certificates of Deposit (ECD) markets. Since 2002, it has served as a central messaging hub directly linking dealers, issuing and paying agents, securities depositories and numbering agencies, allowing them to exchange standardised and secured issuance information in real time. By automating pre-issuance information processing and ISIN allocation for new ECP and ECD issues — and now Euro MTNs — EPIM is enabling these markets to grow and to process these transactions for same-day settlement.
EPIM significantly reduces manual processing costs for the industry, eliminating the labour-intensive and error-prone phone, fax and email-based communications generated during the ISIN request and allocation processes. Through a streamlined, industry-standard messaging and automated workflow, EPIM increases accuracy and reduces processing errors, discrepancies and delays, while preserving the flexibility that characterises the short-term debt money markets.
Susan Cosgrove, Managing Director, DTCC Clearance and Settlement Group, said, “Bringing automation to the ECP marketplace with EPIM has helped drive down costs for new issuances and enhance efficiencies for market participants. By leveraging the EPIM system to bring automation to the MTN market, we are taking another important step in evolving the infrastructure to meet the needs of financial firms and investors. EPIM will eliminate the time consuming and outdated manual processes of the MTN market and help play a role in spurring long-term growth.”
Olivier Grimonpont, Director, Fixed Income Product Management at Euroclear, said, “Taking a proven system like EPIM and leveraging its capabilities and benefits to other asset classes is an excellent way of adding value for clients. As an automated solution that reduces costs and increases efficiency, we believe EPIM will be a welcome improvement to the MTN market, particularly during these times of financial pressure.”
Mark Kieffer, Head of Issuance & Distribution Services at Clearstream Banking, noted that EPIM was critical to support the growth in the ECP market since May 2002. “Now we have the opportunity to bring a similar and much-needed degree of operational efficiency to the MTN market, which we believe is essential to foster greater growth in the years ahead. As an increasing number of investors turn to the MTN market, we are now fully prepared to manage pre-issuance communication and issue new ISINs quickly in an automated environment.”
“EPIM has brought us closer to achieving full straight-through processing in the European commercial paper marketplace,” said Peter Eisenhardt, Chairman of the International Capital Market Association’s ECP Committee. “Speed is absolutely critical, especially when there’s volatility in the money markets. With EPIM, ISINs are assigned in less than five minutes.”
“The ICMSA membership is delighted to see EPIM extend its coverage to MTNs,” said Graham Cox, Chairman of the International Capital Market Services Association. “EPIM has proven to be a great response to the market’s need for a secure, efficient and reliable pre-issuance communication tool. Given its capabilities in terms of volume and speed, and contribution towards STP, we encourage the issuing community to adopt the expanded functionality EPIM offers.”