The activities of globeSettle have been structured according to the “functions” indicated in the CSD Regulation:
- Securities Settlement System;
- Notary function;
- Central administration function.
Securities Settlement System
globeSettle will operate both domestic and cross-border settlement for its participants on a real time gross basis during a time window of 22 hours, from 02:00 am 00.00 CET Domestic settlement will be performed during the above operating hours both for securities where globeSettle acts as “issuer CSD” and for securities where globeSettle acts as “investor CSD”. Cross border settlement will also be performed on a real time gross basis via direct links, operated direct links and indirect links in compliance with local legislation. Immediately after starting operations, globeSettle will activate the following links: Eurozone links via direct link connectivity to Monte Titoli (Italy), though which in “relayed” form, globeSettle will initially access to the whole Eurozone markets, and then access as an Indirect Connected Participant (ICP) to Target 2 Securities. Non-Eurozone European markets via direct link connectivity to the local CSD. This will apply initially to the United Kingdom (Euroclear UK&IE). Some of these links may be operated direct links. Non-European markets via indirect link connectivity (through local settlement bank/custodian), initially in the USA (both FED and DTCC via JP Morgan), Canada (Citi) and Japan (Citi).
At target the transfer of securities in the securities settlement system will be performed both on a free of payment (FOP) or against payment basis (DVP). globeSettle will not operate cash accounts and the settlement of the cash leg in EUR of securities transactions will be performed either in TARGET2 (Central Bank Money) or with cash correspondent banks (Commercial Bank Money), with which participants will establish bilateral arrangements to finance their securities operations. With reference to cross-border securities settlement, globeSettle will perform DVP settlement in EUR through its cash account in TARGET2 or, for non-Euro transactions, the relevant cash correspondent bank. Standard membership as participant to globeSettle will be also granted to central counterparties in their capacity as systemic guarantors of trades for the mitigation of counterparty risk.
globeSettle will have two main categories of participants, classified as issuers or intermediaries, and in this latter category participants will be allowed to operate, on a segregated account basis, both proprietary and third party business. a) Services associated to activities performed for an issuer All securities types in either dematerialized or physical form, with the exception of derivatives, are eligible for issue through globeSettle. Dematerialised securities governed by Luxembourg law are issued through an issue account of the issue with globeSettle. Physical securities issued through globeSettle are held in a vault located within the building where globeSettle has established its headquarters and meets the recognized standards of safety and security access. Article 5 of the CSD Rules provides for requirements for admission of securities whilst the Operating Instructions govern their admission procedure. The placement and distribution of a new issue is recorded in accordance with the instructions received from the issuer. To ensure that the integrity of the issue is preserved, globeSettle performs intraday reconciliations to verify that the number of securities registered on the issuer account corresponds to the sum of securities recorded on the securities accounts of the intermediaries. No overdrafts or debit balances are allowed. globeSettle produces periodical reports detailing its account reconciliation activities. Assets are also subject to daily valorization based on official price sources. b) Services associated to activities performed by an intermediary. globeSettle maintains an account structure enabling each intermediary (as opposed to issuers) to segregate proprietary assets from third party assets.
The account structure allows the protection of intermediaries and of the beneficial owners in case of insolvency of globeSettle or, to the extent the applicable insolvency laws provide for such protection, of the intermediary itself. c) Reporting globeSettle provides various types of reporting to all categories of participants, depending on their needs and regulatory requirements, in relation to its functions either as a securities settlement system or in execution of its notary role or for central administration (asset servicing) of securities, i.e. in the execution of corporate actions, income processing, tax procedures or issuer’s services. Reporting is either provided in real time or in batch mode depending on the processes and phase of the service. Reports are also available either on a periodic basis or “on-demand”.
Central administration of assets
After the recording of the securities on the account of the intermediary , the latter acquires the rights to the securities which may be exercised against globeSettle and is entitled to exercise the rights attached to these securities and he may dispose of them according to Luxembourg law.