Simplification and harmonisation driving crossborder issuance

Greater harmonisation, simplicity and efficiency in cross-border issuance will support an attractive Nordic capital market, according to Nykredit, Nordea and VP at a panel discussion at this year’s Nordic Post Trade conference in Copenhagen.

19.06.2018
“Sure, issuance processes are working. We have an automated bond-issuance set-up operated by very few persons, based on a multi-prospectus and issued at VP. Years back, the set-up was more complex, with different CSD partners, brokers and more complex processes. Issuing under Danish law, and issuing in DKK, EUR and SEK using one CSD, reduces cost and risk,” said EVP Henrik Hjortshøj-Nielsen, Head of Treasury at Nykredit, from the stage at the Nordic Post Trade Conference.

Even though the panellists noted the progress made, they all agreed that greater harmonisation, and thereby simplification, is needed.

“We see the Nordics as one when it comes to issuance, and we’ve centralised the operational handling in a back-office hub in Denmark. Nordea has a broad range of issuances and today we can’t handle it all with one CSD in the Nordics,” said Jørgen Skov Christensen, Chief Expert in Issuer Services, Nordea. “Looking at issuance in a Nordic perspective, we still see a need to simplify and harmonise. Customers don’t mind whether the product is issued in Denmark, Norway, Sweden or Finland. They just care about the product. This is why our goal is to simplify, and we look at this product by product.”

“Issuance is important to customers at the CSDs and for the CSDs themselves,” said Henrik Ohlsen, Customer and Communications Director, VP SECURITIES. “Issuance is the fuel in our engine, and we compete to attract issuance. The more we can utilise the existing infrastructure, the better this is for ourselves and for our customers. Growing competition for issuance is important, and this will challenge the national siloes. This is about being able to offer smooth and stable processes and, of course, adequate services, such as offering issuance in several currencies.”

VP issues in both EUR and SEK and is also looking into NOK. According to Ohlsen, the USD is also relevant to the market. Nykredit is one market participant issuing in SEK from Denmark:

“We’re approaching SEK 40 billion, and investors have bought into SEK bonds issued on a Danish platform,” added Henrik Hjortshøj-Nielsen.

Jørgen Skov Christensen from Nordea had a global perspective on the Nordic marketplace: ”Some of the global customers prefer issuance with one partner, in one location, in a uniform process, even for a range of products. We are working to be a preferred partner, and it’s important for us to have CSDs ready to support this ambition.”

Henrik Ohlsen: “Exactly. CSDs are competing to support Nordic and international business, and T2S is part of that picture. This will add to the competition, and cost efficiency will be important. The market pressure for lower prices will be reflected in the CSDs, for which volume will be important, and this will fuel competition for issuance.”

“From our point of view, simplification at the CSDs is important. We see big changes in certificates, and prices are going down. We would prefer more STP processes for more issuance products,” said Jørgen Skov Christensen.

The moderator asked about innovation and product development at the CSDs, and Henrik Ohlsen argued that VP is adapting its offering to the new competitive landscape:

“Yes, I think we’re adapting our offering for this new competition. One example is that the Nordic model for pricing needs to be adjusted to the European model, and we’re in the middle of this process, which will last two or three years in total. We’re also working to attract issuances in EUR and SEK, and to innovate in products and services.”

The panel agreed that more competition in the Nordic marketplace is welcome, and Henrik Hjortshøj-Nielsen from Nykredit said that competition, reduced costs and greater supply all go together.

“I think harmonisation will be a differentiator for CSDs in the Nordics. This is about simplicity for customers and thereby more efficient processes,” Henrik Ohlsen concluded.

This article is a selected and edited version of the panel debate on 30 May 2018 at the Nordic Post Trade Conference in Copenhagen. Participants have approved their comments quoted.

Henrik Ohlsen

Customers & Communications Director

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It is all about simplicity for our customers and thereby more efficient processes

- Henrik Ohlsen, Customers & Communications Director