LuxCSD, the settlement platform for the Luxembourg market, is to cut its custody fees for equities by 50%, aligning them with bond custody fee schedules from April 1.
The company, which is co-owned by Clearstream International and Banque Centrale du Luxembourg, says the fee reduction is to “further encourage dematerialisation of physical shares”.
The aim is to encourage corporations to dematerialise existing physical securities and to newly issue securities in dematerialised form.
Custody of equities in dematerialised form significantly reduces inefficiencies, risks and costs for the industry and increases the level of transparency regarding the chain of holders of a Luxembourg security, says LuxCSD.
LuxCSD this month handled its first dematerialisation of physical shares for Luxembourg-based BIP Investment Partners with a volume of €400 million.
Patrick Georg, general manager of LuxCSD, said: “By cutting the custody fees for equities by 50% we aim to attract more corporates to dematerialise physical shares and to follow the example of BIP Investment Partners. We strongly support dematerialisation as best practice in securities custody and issuance.”
In April 2013 Luxembourg changed its law governing the dematerialisation of physical securities and it is expected to enhance the appeal of securities issued and dematerialised in Luxembourg.
LuxCSD was created in 2010 as a means of offering Luxembourg’s financial market infrastructure access to Target2-Securities – a new European settlement process that uses central bank money to settle transactions, lowering risks.
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