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Plumbers and Visionaries: Securities Settlement and Europe's Financial Market

Plumbers and Visionaries: Securities Settlement and Europe's Financial Market

Peter Norman

ISBN: 978-0-470-99439-9

Jul 2008

364 pages



Plumbers and Visionaries: Securities Settlement and Europe’s Financial Market is a path-breaking account of the history and future of the securities settlement industry in Europe. Written by experienced journalist and author, Peter Norman, this book takes a look at the less visible, but nevertheless critical segment of the global capital markets, following the development of securities settlement across Europe’s frontiers. It encompasses the free-wheeling days of the Eurobond market in the 1960s, through the growing integration of the European Union, to the highly regulated and efficient multi-trillion euro business securities settlement it is today.

This book is the story of a financial sector that has grown hugely in importance in the 40 years since Euroclear, now the world’s premier settlement system for domestic and international securities transactions, was created to deal with a settlement crisis that threatened to smother the international capital market in its infancy.

Beginning with the settlement crisis in the Eurobond market, this book describes how Euroclear and later Cedel, its arch-rival, were founded to deal with the problem. It follows the challenges posed by cross-border settlement for a growing range of securities when most financial infrastructures operated only within national frontiers. The book demonstrates how securities settlement became an issue for public policy after the stock market crash of 1987 and how the problems of cross-border settlement moved rapidly up the European policy agenda after the euro’s launch.

More than a mere history, this book engages with the people who created the modern European securities settlement industry and taps into the often entertaining memories of its founding fathers. This book also focuses on the difficulties and challenges of cross-border transactions which have been identified as hampering Europe’s economic growth. It looks at the present state of the industry seeking a way forward so that the securities settlement infrastructure will better serve a single European capital market.

List of Tables and Figures.



Chapter 1: Settling Securities Across Borders.

1.1 Turnover in the trillions.

1.2 Process and players.

Chapter 2: The Eurobond Market and the New York Settlement crisis.

2.1 Autostrade shows the way.

2.2 Foreign dollar bonds and their settlement.

2.3 From Autostrade to the New York Settlement Crisis.

2.4 The AIBD.

2.5 Settlement Services in Luxembourg.

Chapter 3: The ICSDs - Euroclear and Cedel.

3.1 Closings in Brussels.

3.2 The creation of Euroclear.

3.3 Establishing Cedel in Luxembourg.

3.4 Cedel’s success.

3.5 The wider settlement picture.

Chapter 4: Euroclear fights back.

4.1 Sale of Euroclear to its users.

4.2 Difficult days.

4.3 Commitment to investment.

4.4 Euclid.

4.5 Securities lending and borrowing.

4.6 The Bridge.

4.7 Prospering in difficult times.


Chapter 5: New Markets, New Tensions.

5.1 Caviar and Champagne.

5.2 1980s – Deregulation and securitisation.

5.3 Diversification at Euroclear.

5.4 The Belgian cooperative.

Chapter 6: After the crash.

6.1 Strengthening cooperation and national systems.

6.2 European considerations.

6.3 American influences.

6.4 Central banks push for DvP.

Chapter 7: The Coming of the Euro.

7.1 A world transformed.

7.2 Beyond G30.

7.3 The EMI and Lamfalussy.

7.4 The growth of Repo activity.

7.5 The ECB and Securities Settlement.


Chapter 8: The Rivals.

8.1 Euroclear and the boom in domestic markets.

8.2 Lussi and the revival of Cedel.

Chapter 9: Change at the Exchanges and CSDs.

9.1 Investment and consolidation.

9.2 Seifert in Frankfurt - A story of vertical integration.

9.3 Theodore in Paris - Innovation through IT.

9.4 Taurus and Crest - a horizontal system by accident.

9.5 The Swiss Value Chain.

9.6 Different blueprints.

Chapter 10: Corporate Manoeuvrings.

10.1 Pressure for change.

10.2 A European Clearing House?

10.3 A meeting of minds in Marrakech.

10.4 Dark days for Euroclear.

10.5 The fight back begins.

10.6 The French defect.

Chapter 11: Euroclear Transformed.

11.1 Euroclear separates from Morgan.

11.2 The creation of Euronext.

11.3 Euroclear acquires Sicovam.

Chapter 12: Seifert's Silo.

12.1 A flurry of initiatives.

12.2 Lussi’s fortunes ebb.

12.3 Lussi’s downfall.

12.4 The banks change tack.

12.5 Seifert secures Clearstream.

Chapter 13: Europe with Two Settlement Models.

13.1 Euroclear acquires Crest.

13.2 A sub-optimal outcome.

13.3 Embedding the vertical and horizontal models.

13.4 LCH and Clearnet merge.

13.5 Fair and Clear.

13.6 Changes in structures and governance.


Chapter 14: The EU reacts.

14.1 The Lisbon Agenda.

14.2 The Lamfalussy Committee of Wise Men.

14.3 The Giovannini Reports.

14.4 The cost of fragmentation.

14.5 The Commission responds.

14.6 The Andria report.

14.7 The ESCB/CESR standards.

14.8 The G30 and EFR reports.

14.9 MiFID.

14.10 The Commission’s second communication.

14.11 The arrival of McCreevy.

Chapter 15: Setting Parameters.

15.1 Algorithms and Exchanges.

15.2 Seifert and the law of unintended consequences.

15.3 Exchange consolidation: an unpredictable catalyst.

15.4 Competition authorities turn against silos.

15.5 Competition and interoperability.

15.6 For and against a single CCP.

15.7 User discontent.

15.8 Change at Euroclear.

Chapter 16: Work in Progress.

16.1 Euroclear’s domestic market for Europe.

16.2: Cesame and the dismantling of the Giovannini barriers.

Chapter 17: Frameworks for the Future.

17.1 Two solutions at once.

17.2 The code of conduct.

17.3 Target2-Securities.

17.4 T2S - The follow up.

17.5 Questions and more questions.

Chapter 18: Conclusions and Reflections.

Appendix A. References and Bibliography.

Appendix B. Key dates for the Securities Settlement Industry in Europe.

Appendix C. Who’s Who in the History of European Securities Settlement.

Appendix D. Glossary of Technical Terms.

Appendix E. Afterword.


""...will interest specialists, general readers and fans of detective fiction... grippingly relevant to current economic circumstances""  (Financial Times, Monday 7th January 2008)

""virtually the only book to cover this arcane subject comprehensively, it is an essential complement for any financial market’s library."" (Financial World, February 2008)

""...a comprehensive and exhaustively researched study.."" (Speed, Vol. 2)

“Norman has produced a history of EU clearing and settlement systems” (European Voice, Thursday 14th February 2008)

“...deserves to become compulsory reading for regulators and policy makers everywhere."" (Global Custodian, Spring 2008)