What is Euroclear?
Euroclear is a company that provides settlement services for securities transactions. This means that it acts as a central register of transactions in stocks, investment funds, and other equities. It fulfills this role for several countries, as well as being one of only two to do it on an international basis.
As of 2010, Euroclear was the central securities depository for seven countries, making it the sole central register for security transactions in those countries. By definition, each country only has one central securities depository. The seven countries are Belgium, Finland, France, the Netherlands, the Republic of Ireland, Sweden, and the United Kingdom.
As well as its national roles, Euroclear is one of two international central securities depositories, alongside ClearStream International. In this role, it coordinates the movement of Eurobonds. These are bonds that are issued in one country but use a currency of another country. This will often be done to make it easier for companies to attract loans from investors in other countries. Specific Eurobonds are named after their designated currency: for example, those denominated in the Japanese yen are known as Euroyen bonds.
Just over 85 percent of the Euroclear parent group is owned and operated by its clients. The rest of the company is owned by Sicovam, a company that formerly oversaw the numbering system used for securities on France's stock exchanges. The parent group wholly controls a subsidiary, Euroclear SA/NV, which oversees the individual organizations that run each national central securities depository.
In 2010, the group reported that it settled 180 million transactions a year, totaling 500 trillion euros. Based on capitalization, the total value of the securities from each company on a market, it dealt with 50 percent of all European debt-based securities and 60 percent of all European equity-based securities. It also noted that it dealt with 30 currencies across 90 countries. As well as handling transactions, it held 20 trillion euros-worth of assets for clients.
Euroclear was originally founded by the Belgian office of the New York-based Morgan Guaranty trust company in 1968. It was set up to make the Eurobond market run more smoothly, given the inevitable administrative issues of so much cross-border investment. Morgan Guaranty ceased its involvement in 2000, and the structure involving Euroclear SA/NV dates from 2005. The parent plc group is regulated by United Kingdom finance laws, while the SA/NV group is subject to Belgian regulation.
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