2017: Positioning VP for the future
VP SECURITIES (VP) has published its Annual Report for 2017.
In 2017, VP continued the implementation of wide-ranging initiatives to strengthen its platform and to adapt to the new European post-trade reality – with the aim of being the preferred CSD partner in tomorrow’s market. During the year, VP focused on implementing its ambitious customer and market strategy and reached important milestones. Among other things, VP gained a CSDR licence, launched a new pricing policy, and initiated an Operational Excellence programme aimed at improving customer service for all our customers.
VP delivered satisfactory financial results on a par with the previous year. The results reflect an underlying activity increase in the core business areas combined with significant investments in developing the organisation and the platform.
“We face a challenging and evolving market environment, primarily driven by EU regulation and the establishment of a European settlement platform. During recent years, VP has invested in, and prepared for, the regulatory changes and competition following CSDR and T2S – with the aim of positioning VP in the best possible way in the new market conditions. It’s difficult to predict the outcome of these changes in the longer run, but we anticipate that they will lead to harmonisation, standardisation and increased transparency – entailing intensified cross-border competition, since banks, as well as issuers, will have a free choice of CSDs to handle their securities. However, the major changes have not yet occurred, and are not predicted to materialise in the coming years,” says Niels Olsen, CEO at VP.
VP gains a CSDR licence
At the end of May 2017, VP applied for a European licence to operate as a CSD under the new CSD Regulation, and the approval of the Danish FSA was obtained on 3 January 2018.
The European CSD licence will enable VP to conduct business in any EU/EEA member state. The intention is for issuers to be able to choose freely among CSDs, while custodian banks will be able to hold their securities with their CSD of choice.
From now on, VP will be regulated by CSDR and the new Danish legislation (the Danish Capital Markets Act), which came into effect on the same day. VP is among the very first CSDs in the EU to be authorised under the new European CSD Regulation, and gaining the CSDR licence is a very important milestone.
Preparing for DKK on T2S in October 2018
VP joined T2S in September 2016 and since then EUR transactions has settled on the European platform. VP is currently preparing for the next step, which is expected to take place on 29 October 2018, when DKK will become available on T2S. This entails new operational procedures and new business opportunities for virtually all of VP’s customers – and we believe that all of these changes will contribute to increasing competition and improving efficiency, besides optimising settlement and reducing transaction costs in general in the longer run. During 2017, VP initiated several customer-oriented activities with the aim of making the upcoming transition to T2S as smooth as possible.
Higher trading activity
in 2017, trading activity, in terms of number of trades conducted, was 16.8 million. This corresponds to an increase of 5 per cent compared to 2016, while the market value of securities traded in 2017 amounted to DKK 40,808 billion, equivalent to a decrease of 8 per cent.
At the end of 2017, the total market value of securities book-entered at VP amounted to DKK 8.257 billion, which is DKK 753 billion higher than at the end of 2016, corresponding to an increase of 10 per cent.
The total number of securities issued via VP amounted to 5,008 securities at the end of 2017, comprising shares, bonds, investment fund certificates and warrants. This is an increase of 16.4 per cent compared to 2016.
As at end of 2017, the number of custody accounts had declined by 0.1 million to 3.0 million accounts.
VP’s turnover, operating result and profit developed satisfactorily in 2017.
The net turnover amounted to DKK 438.4 million, which is DKK 24.6 million higher than in 2016, corresponding to an increase of 6 per cent. The increase is primarily attributable to greater market activity, the increased market value of securities and extraordinary activity within the investment fund market due to the implementation of MiFID II.
The profit for the year was DKK 130 million, which is DKK 3 million higher than in 2016.
Moving closer to our customers
“We’re convinced that our substantial investments in our organisation and platform, in combination with a strong customer focus, will be a future competitive differentiator enabling us to increase our business with new and existing customers in the years to come. Our aim is to be the preferred CSD partner, and we are fully aware that this requires a truly professional approach and a deep insight into how we can create value for our customers and contribute to their success. Hence, we will continue to move closer to our customers with the objective of building even stronger relationships and we will continuously adapt our services and processes to match our customers’ demands,” concludes Niels Olsen.
For more information…
Please contact CEO Niels Olsen.
Download the Annual Report here