Euroclear, the Brussels-based international depository, will offer real-time settlement as of the settlement date of June 29, officials said last week.
By Friday, June 26 at 10 p.m. (Brussels time), participants must designate whether they want their instructions to be processed on a real- time basis over the weekend of June 27. Real-time settlement would initially replace Euroclear's daytime processing cycle, with the nighttime cycle remaining in batch mode until the year 2000.
Euroclear has been discussing its real-time settlement plans for more than two years. Depository officials said they could not disclose how many participants they expect to take advantage of the new service.
Participants wanting a head start on the new processing environment will be able to test Euroclear's real-time settlement system as of April 1 (Securities Industry News, Feb. 2). The testing environment-to be offered through Euroclear participants' Euclid and Swift terminals-will be based on a simulation of an actual Euroclear processing day-Jan. 19. The simulation will include actual transaction data in the Euroclear system as of the end of business on Jan. 16, with both the batch and real-time processes simulated. Euclid is a proprietary Euroclear communications network.
Real-time settlement, a voluntary settlement process, means that once instructions are matched between Euroclear participants, securities and cash can be moved between accounts automatically and can be credited on a real-time basis. However, settlement will not occur until the designated settlement date, which is usually one or two days after instructions have been received and matched.
Euroclear's introduction of real-time settlement coincides with similar plans by several European countries. These plans will be instituted in time for the European monetary union, which could see an increase in cross- border transactions. Euroclear, which settles cross-border trades in book- entry form either via direct links to other European depositories or by using local banks as intermediaries, has heavily promoted its capabilities as a one-stop pan-European processing hub.