Philippe Seyll (Clearstream): 50 years and ready for the future
Founded in Luxembourg in 1970 by a consortium of 66 banks, Clearstream is celebrating its 50th anniversary. Clearstream Banking S.A. CEO Philippe Seyll says the company has steadily expanded its capabilities from bond clearing and settlement to securities financing and fund services, embracing blockchain and other financial technology innovations.
What exactly does Clearstream do?
The world's entire financial system is built on trust. Fifty years ago, the business then known as Cedel was created in Luxembourg to facilitate the issuance of Eurobonds and to provide trust to the industry by ensuring that all parties receive what they are due under a transaction. Today, Clearstream has evolved into a leading European supplier of post-trade services. As a market infrastructure provider, we have helped shape markets as they have become more interconnected, complex and digitalised over the past five decades. We developed our core expertise from Luxembourg for years until we felt comfortable to extend our range of services, first in securities financing and subsequently with services to investment funds. Today, we serve 47 central banks around the world as well as financial institutions ranging from custodians, universal banks and broker-dealers to investment banks.
“The world's entire financial system is built on trust.”
What were the key developments in Clearstream’s evolution over the decades?
Cedel was initially created by a consortium of 66 banks from 11 countries in 1970. In 2000, Cedel merged with Deutsche Börse Clearing – previously known as Deutscher Kassenverein – to become Clearstream. The founder shareholders sold their stakes in the company in 2002 to Deutsche Börse, which remains the owner of Clearstream today. And in 2005, we extended our activities to funds with the launch of Vestima+. Fifteen years later, this segment has developed progressively and is today Clearstream’s fastest growing business. Throughout the years, our core task has remained the same: fostering the efficiency, stability and integrity of financial markets.
What developments do you see for the company in the future?
As a commercial company, we need to remain relevant in order to keep our clients, also in times of increasing decentralisation in the financial services industry. They vote with their feet! Our core custody business, which is global by nature, is a very mature business with decreasing margins, so the name of the game is to become more efficient, bigger or find pockets where you can add value. Of course, Europe remains an important point of focus here, but the game is about scale. In our global funding and financing services, we are actively promoting the emergence of fintech firms. In today’s world, we move assets from one account to another. But the more substantial the asset, the more complex it is to move. One idea is to create a lighter avatar by means of new technology such as blockchain. With distributed ledger technology, assets can be dematerialised, while the decentralised nodes keep track of whom the assets belong to. To tap into this potential, Deutsche Börse has invested in the Luxembourg-based start-up HQLAᵡ which offers a digital collateral registry to the secured funding and securities financing market. In addition, as the biggest player in fund transaction execution and custody, we aim to be at the forefront of fintech innovation in this segment, too. We have extended our position along the value chain from fund processing into the global distribution of funds through the acquisition of Swisscanto Fund Centre from Zürcher Kantonalbank and a majority stake in Fondcenter, a fund distribution firm developed by UBS, making us one of the largest players in the fund distribution sector. We are also investing in FundsDLT, a blockchain platform for funds, because we believe the fund issuance process will be transformed by fintech and especially blockchain. From our base in Luxembourg, we are actively preparing for the future through investment and partnerships.
We hold €15 trillion of assets in custody (€15,000 billion).
We process 170 million transactions settlements annually.
We hold an AA credit rating.
Our weekly turnover is around the same as the UK’s GDP.
We manage €600 billion in collateral on an overnight basis.
We handle €2.5 trillion of fund assets on the Vestima+ order routing system (compared with a total of €4.8 trillion in fund assets domiciled in Luxembourg).