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SIA and BMA Announce Plans for Merger

Euroclear Bank Lowers Safekeeping Fees, MUSI Using Syn~ to Settle Fixed Income, and SWIFT Makes Recommendation to Eliminate Giovannini Barrier

SIA and BMA Plan to Merge

The Bond Market Association and the Securities Industry Association released a statement endorsing the concept of merging the two associations into a single new entity. The organizations expect that by merging, they will more effectively represent the member companies and the industry while enhancing the public's trust and confidence in the markets. The associations' boards will vote on the merger by June 30th, followed by a vote of the full membership.

Leaders from both associations have been working for the last several months to design a combined organization that could, as a single entity, more effectively represent the interests of the securities industry and the broad array of equity and fixed income markets and do so with intense local focus as well as representing these industries globally. "The combined organization is intended to meet the needs of the member financial services firms in their roles as broker dealers, investment advisers and asset managers, as well as representing the interests of private client and institutional investors," said the statement.

Euroclear Bank Lowers Safekeeping Fees

Euroclear Bank is reducing its safekeeping fees for international debt securities (including eurobonds) $188 million per year as of May 1. This latest move to share growing economies of scale and lower operating costs with clients means that, over the past three years, more than $470 million in tariff reductions have been implemented by Euroclear Bank for the custody of international debt securities. Newly defined thresholds in Euroclear Bank's sliding-scale safekeeping tariff will offer steeper discounts at both the mid-range of business as well as the high-volume end of the scale.

"We never lose sight of our core business objectives and are delighted that we are able to continue improving our competitive value proposition by enhancing services and lowering fees. The Euroclear Board, comprised of clients, welcomes this development, which reinforces Euroclear Bank as the settlement location of choice for eurobond and other securities trades," said Martine Dinne, CEO of Euroclear Bank, in a release.

A portion of the latest tariff reduction has been made possible due to renegotiated terms with all shared common depositories for international securities, as part of a recent review process initiated together by Euroclear Bank and Clearstream.

MUSI Goes Live With Syn~ for Fixed Income Settlement

Mitsubishi UFJ Securities International (MUSI) has gone live with Syn~Settlements from Coexis. The ADP Wilco Gloss system has been turned off and the implementation project to standardize on Syn~ for workflow and lifecycle management of all MUSI's cash markets settlements is complete.

"With Syn~ in place we are now able to address achieving high STP levels for an extended range of asset classes including the full range of fixed income instruments and securities financing transaction types such as repos," said Don Simpson, managing director of operations & technology at MUSI, in a release. "We have every reason to expect similar high levels of STP - at around 95 per cent -- that we have already attained by using Syn~ for equity settlement and for counterparty static reference."

Syn~Settlements is a rules- and lifecycle-driven back-office processing engine handling all transactions from trade capture through to ledger postings. Syn~ reduces operational costs and improves STP through its automated approach to exception handling for the correction and rapid repair of transactions.

MUSI is involved in capital markets businesses including structured finance, equities, fixed income products, derivatives, exotics and new issues.

Key Milestone Reached in the Elimination of Giovannini Barrier 1

SWIFT released, on behalf of the Independent Advisory Group (IAG), the final recommendation for the communication protocol designed to eliminate Giovannini Barrier 1 in the European securities clearing and settlement market. The proposal is available on the SWIFT Web site, http://www.swift.com.

Giovannini Barrier 1 is the project to address national differences in the information technology and interfaces used by clearing and settlement providers and to eliminate those differences with an EU-wide protocol.

In October 2005, SWIFT published the draft recommendation for a common communication protocol. Industry response was unanimous in agreeing that the draft protocol, based on the ISO 15022 and 20022 standards, would eliminate Barrier 1. Additionally, the vast majority of institutions and infrastructures responding to the draft publication indicated their intent to implement the solution over the specified 5-year time horizon. The project will now move into the implementation phase with the proposed creation of an infrastructure roadmap showing how compliance will be achieved.

Andrew Douglas, manager of market reform initiatives at SWIFT, was responsible for reviewing the responses against the draft and preparing the final version of the protocol for publication. "Direct input has been received from market infrastructures, financial institutions, industry associations, regulators and many other players from across the European Union as well as from markets outside the European Union," he said, in a release. "The level of support and contribution made to the communication protocol released today ensures that it is an industry designed solution."

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