by Craig Donner
The Depository Trust Company (DTC), in conjunction with Clearstream and Euroclear, has launched a new web-based workstation for its European Pre-Issuance Messaging (EPIM) service in an effort to bring greater automation, reduced risk and lower costs to the issuance of European money market instruments.
The workstation, which went live this year, is expected to help broaden use of EPIM among dealers and issuing and paying agents (IPAs) who tend to have smaller volumes. The workstation will allow these customers to access the EPIM service via the Internet instead of having to establish a direct connection.
“More than 20 major financial institutions that service the European money markets already use EPIM; now the workstation makes it cost-effective for firms of all sizes to eliminate laborintensive and error-prone manual processes for their pre-issuance communications,” said Susan Cosgrove, DTCC managing director, Clearance and Settlement/ Equities. “This is an important step in helping the market grow over the long term while mitigating operational risk and the costs associated with the manual processing for issuing international short-term paper.”
How it works
EPIM links dealers, IPAs and Clearstream and Euroclear via a central communications hub that automates the process of requesting and issuing International Securities Identification Numbers (known as ISINs) for European Commercial Paper, European Certificates of Deposit and European Medium-Term Notes.
ISINs are the unique 12-character codes that identify international financial instruments, including commercial paper, bonds and equities. They are issued by either Clearstream or Euroclear in their capacity as International Central Securities Depositories (ICSDs) for Europe.
The workstation allows dealers and IPAs to send and receive EPIM messages, including those that introduce, update, amend or cancel ISIN requests. Once a message has been submitted, the IPA receives it for processing and can send it back via the EPIM hub to the dealer for further action or to the ICSD to allocate an ISIN. The ICSD processes the message and notifies both the dealer and IPA of the new ISIN.
The workstation also provides functionality to upload data, track the status of messages in real time and access archived records.
“Before EPIM, the process of requesting and obtaining an ISIN was inefficient and involved a series of phone calls, faxes and email,” said Javette Laremont, DTCC director, Settlement Product Management. “Today, EPIM completes that circle in near-real time, eliminating the discrepancies, delays and errors that have long characterized the processing of European pre-issuance communication.”
Laremont added that the launch of the workstation will not result in any additional charges to users but is priced on the same per-message basis as the EPIM hub model.
The International Capital Market Services Association, Clearstream and Euroclear recently announced plans to make the use of EPIM mandatory as of February 1, 2011.
“Working with our partners Clearstream and Euroclear, we have made significant investments in EPIM over the past eight years to bring the industry to this point,” Cosgrove said. “The EPIM workstation
represents the final piece of the puzzle to fully automate the pre-issuance trade data communication and the ISIN allocation process.” @