Clearstream International: What It is, How It Works

What Is Clearstream International?

Clearstream International is a supplier of post-trading services for the financial markets. Its core businesses are settlement of market transactions and custody of securities.

Based in Luxembourg, Clearstream International is owned by Deutsche Börse AG.

Understanding Clearstream International

Every purchase or sale of a stock or other security through an exchange anywhere in the world is verified, processed, and recorded by a third party. The transaction is not finalized until that happens. In addition, the certificates that used to be exchanged on paper when shares of stock were sold still exist in some form, and must be deposited somewhere.

Clearstream International is one of the companies that perform these services. It serves as an international securities depository and also is the securities depository for all domestic securities from Germany and Luxembourg.

The company was formed through the merger of Cedel International and Deutsche Börse Clearing in January 2000. It is now a wholly-owned subsidiary of Deutsche Börse, one of the largest exchanges in the world.

Clearstream's International Customers

Clearstream's customers are primarily financial institutions and trading venues. The company has developed an especially strong position in the international fixed income market, handling the clearing and settlement of Eurobonds.

The scale of Clearstream's operations is immense. In 2021, its custodial assets totaled about 16 trillion euros. It has about 2,500 customers in 110 countries,

Clearstream settles more than 250,000 transactions daily.

The company is an international central securities depository (ICSD). It provides post-trade infrastructure and securities services for international and domestic markets.

Clearstream International Services

Clearstream services for the securities markets include the following:

• Distribution and settlement processing of new issues
• Income and redemption payment processing
• Corporate actions, tax and proxy voting services, and reporting and safekeeping services
• Cash and banking services, such as commercial and central bank money services

Additional Business Arms

Clearstream also provides connectivity solutions including CleartstreamXact, a web-based connectivity channel, and MyStandards, a web platform to manage ISO messaging standards and market practices.

In addition, Clearstream provides global securities financing services. Its investment fund services include Vestima, which supports the distribution needs of the investment fund industry.

The company provides global issuance services, post-issuance services, safekeeping and vaults, and reference data services. It offers IT solutions such as hosting, connectivity, compliance, and operational solutions.

It also provides settlement services, including commercial and central bank money settlement as well as other settlement services.

Clearstream's competitors include the U.S.-based Depository Trust & Clearing Corp. (DTCC), which provides clearing and settlement services to most U.S. financial markets. DTCC has existed since the mid-1970s, when electronic systems were first being developed to relieve brokerages and stock exchanges from the onerous task of processing paper certificates.