SWX Swiss Exchange has teamed with SISInterSettle and Clearstream to launch a service that will reduce the costs involved in the cross-border settlement of German mortgage bonds.
Effective from autumn 2003, trades in German mortgage bonds settled between SIS SegaInterSettle and Clearstream will be considered national transactions instead of cross-border trades and consequently lower domestic rates will apply.
SWX says the new settlement service will reduce costs for market participants by approximately €10 per transaction.
Settlement is fully automated so trading parties do not need to issue instructions. Securities transactions will be transmitted and processed via the existing CSD link between Clearstream Banking Frankfurt and SIS SegaInterSettle, resulting in a higher straight-through processing rate. Furthermore, market participants will be able to concentrate their holdings with their preferred settlement organisation.
In a statement, the three organisations says: "The implementation of this new process represents a further important step towards reducing the costs involved in crossborder settlement of German mortgage bonds. Indeed, transaction costs will decrease by more than 90%."