How Does Euroclear Settlement Work

The Euroclear settlement, the leading International Central Securities Depository (ICSD), is your gateway to counterparties worldwide for post-trade services, covering more than 1 million securities.

The Euroclear group’s national Central Securities Depositories (CSDs) for Belgium, Finland, France, Ireland, the Netherlands, Sweden and the United Kingdom serve local clients for local transactions.

How does Euroclear Settlement Works?

Established in 1968, Euroclear enables its members (through their own accounts in Euroclear) to settle securities transactions by moving securities free of payment or against cash. Euroclear is an international settlement system in that it does not support a particular domestic securities market but supports the settlement of the securities issued in a variety of jurisdictions and under a variety of laws. Its computerised settlement and deposit system ensured that Eurobonds were delivered and paid safely.

Its members are banks, financial institutions or securities houses. They must meet certain criteria for admission to the Euroclear system.

These include:

  • financial resources
  • operational capability
  • projected settlement volumes

Euroclear members instruct the settlement of transactions and make inquiries of Euroclear as to their holdings by means of Euroclear’s proprietary interface (Euclid) or by using the Society for World Interbank Financial Telecommunication (SWIFT) network. Euclid is available only to Euroclear members. Only Euroclear members can access Euroclear using SWIFT.

Euroclear Bank does not currently disclose the admission criteria for securities, but these are likely to require that (a) a security is freely transferable, (b) interests in it are capable of electronic settlement, and (c) each unit in a security (as denoted by the ISIN—see below) is fungible with every other.

The majority of its clients are banks, broker-dealers, and other financial institutions that specialise in managing new securities issues, market-making, trading, or holding a wide range of securities. Euroclear is a repository for domestic and international securities transactions, including bonds, stocks, derivatives, and mutual funds.

The Euroclear system accepts over 190,000 national and international securities, including a wide range of internationally traded fixed and floating rate debt instruments, convertibles, warrants, and equities.

How to become a member of Euroclear

Companies that wish to settle their securities transactions and hold securities in the CREST system have two main options:

  • become a direct member. These are firms that have invested in the hardware and software to connect directly with us. We interact using dedicated secure networks to exchange electronic messages
  • become a sponsored member. Sponsored members do not have a direct connection to the CREST system and operate through another member or ‘sponsor’.