What to expect from a mid-sized CSD in a changing environment. A guest commentary from Peter Felsinger and Georg Zinner, Co-Heads of the Austrian CSD at OeKB.
Over the past years our industry has been forced to respond to a lot of changes such as mandatory modifications imposed by European authorities or voluntary adaptions based on industry standards.
CSD Regulation changes the framework
We are proud to say that most principles stated by the EU CSD regulation are nothing new to OeKB. In fact, user governance, open access, risk free processes to name just a few, have been part of our business model for many years.
The main news is that following the rule of separation of CSD business from other business, OeKB will spin off its CSD. As of September 2015, OeKB’s 100% subsidiary, OeKB CSD, will run the CSD business in Austria. Even though this change will have an impact on the Austrian CSD, our customers should expect a smooth transition.
New possibilities resulting from T2S
With the T2S platform, OeKB will be able to connect with many of Europe’s markets and settle on the same terms and costs as larger players. This paved the way to offer our CSD customers exactly the products they need and thus further develop this area of our asset servicing business.
When discussing the new European securities settlement system, one has to be aware that the state of readiness of individual countries in CEE and their infrastructure providers for T2S differ greatly. The corollary is that those which stay on the sidelines run the risk of losing business and find themselves facing commercial difficulties. By contrast, markets which open their infrastructure to international investors will ultimately succeed.
OeKB, which is busy finalising the decommissioning of its proprietary systems parallel to preparing for T2S, is optimistic about its own future. On the back of reduced costs and increased efficiency, we are sure to profit from this level playing field and become an even more attractive partner for national and international customers.
In regard to T2S, OeKB customers can expect:
- automatic migration to the new system for existing participants
- availability of the full T2S functionality
- adherence to all T2S harmonisation standards
- settlement of all securities via T2S (Austrian and non-Austrian)
Implementing European industry standards
Among others, the Corporate Actions Joint Working Group (CAJWG) published market standards aimed at reducing the costs and risks associated with cross-border processing. Aligned with the Austrian National Implementation Group (CANIG), OeKB CSD will introduce the following market standards starting from 16 November:
- Record date: Distributions and mandatory reorganisations will be processed exclusively on the basis of the Record Date to be announced by the issuer.
- New ISIN for mandatory reorganisations: CAJWG standards require mandatory reorganisations (e.g. splits, reverse splits, mergers) to be conducted exclusively using a new ISIN for the security affected by the capital measure.
While it is important not to overstate the importance that current alterations might have in terms of unifying security services, it is almost as important not to underestimate the impact they could have on markets and market participants.
In this sense, our strategy is to offer a common standard business model based on international standards so that our customers can use our services with minimum effort.
About OeKB
Oesterreichische Kontrollbank AG (OeKB) is Austria´s main financial service provider for the export industry and the capital markets. AAA-rated OeKB operates across all sectors, centrally, impartially and in accordance with a strict sustainability policy. Founded in 1946, this specialised organisation, is owned by Austrian banks.