Clearstream
Clearstream is a premier pan-European facility for the clearing and settlement of eurobonds and other financial instruments. It is based in Luxembourg and acts as a crucial component of the European financial market infrastructure. Clearstream was originally established as Clearstream International in 2000, resulting from the merger of Deutsche Börse Clearing and Centrale de Livraison de Valeurs Mobilès (Cedel International). Today, it is a wholly-owned subsidiary of Deutsche Börse, one of the largest exchange organizations in the world.
Examples
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Eurobond Transactions: Clearstream provides services for the clearing and settlement of eurobonds, ensuring the smooth and efficient handling of these transactions between buying and selling parties across Europe.
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Custody Services: A global investment manager might use Clearstream for custody services of various financial assets, ensuring their safekeeping and efficient management.
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Collateral Management: Financial institutions use Clearstream’s collateral management services to optimize their liquidity and meet regulatory requirements for collateral holdings.
Frequently Asked Questions (FAQs)
What is the primary function of Clearstream?
Clearstream’s primary function involves the clearing and settlement of financial securities, particularly eurobonds, across European markets. It acts as a central securities depository (CSD) and International Central Securities Depository (ICSD).
How does Clearstream contribute to financial market stability?
Clearstream enhances financial market stability by providing safe, efficient, and reliable clearing and settlement services. It reduces counterparty risk and ensures the smooth transfer of financial instruments.
Who owns Clearstream?
Clearstream is a wholly-owned subsidiary of Deutsche Börse, a major global financial market infrastructure provider based in Germany.
When was Clearstream established?
Clearstream was established in 2000 through the merger of Deutsche Börse Clearing and Centrale de Livraison de Valeurs Mobilès (Cedel International).
Which types of financial instruments does Clearstream handle?
Clearstream handles a variety of financial instruments, including eurobonds, equities, government bonds, corporate bonds, structured finance products, and other securities.
Related Terms
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Eurobonds: Debt securities issued in international markets, typically denominated in a currency different from the currency of the issuer’s country. They are often used for the purpose of raising capital across borders.
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Deutsche Börse: A German marketplace for trading shares and other securities. It is also the parent company of Clearstream, providing a range of services covering the entire securities trading process.
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Clearing: The process of reconciling purchase and sale orders and facilitating the transfer of securities and funds between parties involved in a transaction.
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Settlement: The final transfer of securities and funds between buyers and sellers, completing the transaction.
Online References
- Clearstream Website
- Deutsche Börse Website
- Eurobonds Explanation - Investopedia
- European Central Bank - Clearing and Settlement
Suggested Books for Further Studies
- The Basics of Clearing and Settlement: From Bargain to Trade by David Loader
- Clearing Services for Global Markets: A Framework for the Future Development of the Clearing Industry by Darrell Duffie
- Securities Finance: Securities Lending and Repurchase Agreements by Frank J. Fabozzi and Steven V. Mann
- Financial Market Operations by Keith Dickinson
Accounting Basics: “Clearstream” Fundamentals Quiz
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