2016 was an eventful year for VP
VP SECURITIES (VP) has just published its Annual Report for 2016. VP performed well during the 2016 financial year, and is ready to meet the challenges in a liberalised market. Major projects were completed successfully, and the profit for the year increased by 4 per cent to DKK 127 million.
During the financial year, VP completed several strategically important projects. The largest project since VP's establishment is connection to the pan-European settlement platform, TARGET2-Securities, T2S. VP achieved successful migration to T2S during the weekend of 10-11 September 2016, for both VP SECURITIES and VP LUX.
"T2S is a major complex project that has been subject to several delays. I'm proud that we've proved our ability to complete the project according to the original time schedule," says Niels Olsen.
The Central Securities Depository Regulation, CSDR was expected to come into force in 2016. CSDR is the EU regulation which, in general terms, replaces national legislation concerning central securities depositories. CSDR will provide the basis for liberalisation of the market and create competition between the European CSDs. A key element of CSDR is that approved CSDs will be licensed to offer their services throughout the EU. VP expects to apply for a licence in Q2 2017.
Stable operation and system flexibility is a core service
Once again in 2016, VP's core systems achieved stable operation. Accessibility was 99.9 per cent, and a new record was set for the number of transactions the platform can settle in one day. This record was set on 29 April, when a total of 330,827 transactions were completed. For comparison, the average number of transactions per day was just over 63,000 in 2016.
VP's system is structured with segregated securities accounts, giving optimum investor protection. The number of securities accounts at the end of 2016 was 3.3 million.
"Stable operation and system flexibility are vitally important for the financial sector. VP's IT platform is one of our key strategic strengths when the market is liberalised in 2017," says Niels Olsen.
A total of 16 million transactions took place in 2016, reflecting a modest decline of 4.4 per cent from the previous year. The breakdown in 2016 is 7.8 million share transactions, 0.7 million bond transactions, and 7.5 million unit trust certificate transactions.
While the number of transactions declined slightly, the number of issues showed a good increase. In net terms, a total of 558 securities were issued via VP in 2016. This is an increase of no less than 16.2 per cent. At the end of 2016, a total of 4,007 securities had been issued, for an overall value of DKK 7,830 billion.
In 2016, VP's net revenue reached DKK 414 million, which represents a modest increase from revenue of DKK 411 million in 2015. The result in the Annual Report just published is a profit after tax of DKK 127 million. This is an increase of 4 per cent from the previous year.
"This result is satisfactory. We've managed to maintain our earning capacity despite a slightly lower level of activity in the financial market, with slightly fewer transactions as a consequence. We've thus consolidated our financial strength in 2016, and are ready to comply with the new capital adequacy regulations as a consequence of CSDR," says Niels Olsen.
VP wishes to be customer's preferred CSD partner
During 2016, VP's management finalised a new strategy, as described in Business Plan 2020. With the new strategy, VP sets a clear direction for how it can best reap the commercial benefits of liberalisation. VP commands a unique position as the link between the Nordic region and central Europe, where T2S is expected to be the standard for settlement of securities transactions.
"VP has consolidated its position in 2016. We have a stable and scalable platform, European functionality and competitive prices. With our new strategy, and a new organisation, we're ready to tackle the challenges, and to fulfil our vision to be the customer's preferred CSD partner," Niels Olsen concludes.
Download the English version of the Annual Report here.