Nordic CSDs see European harmonisation as the way forward

European harmonisation has been a key focus area in VP Securities for the past few years.

The migration to the T2S platform and the current strategic direction are all significant steps towards harmonising the Danish market with European market standards. The prevailing sentiment from VP’s perspective has always been, according to VP CEO Niels Olsen, “The future lies in a harmonised European market.” Yet, what about the other Nordic CSDs? Do they share the belief that harmonisation is the future?


The latest PostTrade 360° event, held on 3 June 2020, was historic for many reasons. Due to the current COVID-19 pandemic, the event was hosted entirely online for the first time in its history. Over 900 participants signed up for a virtual conference. It was also historic, as it was the first time all four Central Securities Depositories (CSDs) from the Nordic region, i.e. Norway, Denmark, Sweden and Finland, were represented “on-stage” for a panel discussion.

Working towards a European model

That was one of the questions raised at a panel discussion involving CEOs from all four Nordic CSDs, i.e. Denmark, Norway, Sweden and Finland, at the recent PostTrade 360° Web Summit. “All of us are striving for European standards,” commented Hanna Vainio, CEO at Euroclear Finland. “I think that’s the only solution going forward and we need to move away from domestic and local.”

Audun Bø, CEO of Euronext VPS agreed and cited the example of how this harmonisation mind-set directs the decisions his CSD makes in connection with its CSDR implementation. “In all respects, where we have to choose between continuing a local practice or implementing a more harmonised European practice, we will go for the latter.” According to Audun Bø, opting for the harmonised approach is something their clients expect. “Our clients are the international Nordic banks, so they are interested in international solutions. And even in the local financial community, most of these clients also have a more international business model now. So, I think all agree that the direction is towards international harmonisation.”

The panellists all highlighted that the major pan-Nordic clients, which all four CSDs have in common, are all interested in shared solutions that make the post-trade process more efficient and cost-effective. “We are all discussing with the same clients and they all have the same expectations of us. They don’t want to implement the same new practices in four different ways in four countries. That’s just too expensive,” Audun Bø stated.

Cross-border cooperation, as well as competition

One of the interesting developments in the Nordic CSD market is the fact that Euronext and Euroclear will each own two CSDs in the Nordic region, once the Danish FSA approves the Euronext-VP deal. Industry analysts have wondered what this will mean for competition and potential cooperation between the Nordic countries. When the moderator, Goran Förs, asked about this, harmonisation again played a significant role, according to the panellists.

Michael Carty, CEO at Euroclear Sweden, stated: “The reality is that, irrespective of ownership, harmonisation will be bringing the four of us closer together in the coming years… So there is an opportunity to do more for our clients on a common ground. There will probably be increased and continued competition between us for the less sticky products…, but that’s just a normal part of the game. For the core business, I think harmonisation will be a benefit for clients, with all of us moving in roughly the same direction, which is towards Europe.”

However, Michael Carty was also quick to point out that harmonisation, when looking at it from the Swedish perspective, is about more than systems. “I think it’s important that we do things in the right order. Harmonisation and T2S involves much more than an IT project. We should go through the process of discussing with legislators, looking at market practice, and doing it in a good way.”

Harmonisation: a status report

With this mutual agreement that European harmonisation is the way forward, it’s interesting to see how far the respective CSDs are from reaching the European standard. In the latest European Central Bank T2S Harmonisation Progress Report , published in January of this year, VP rated fully-compliant on all parameters. “In our work with T2S, we have established a platform based on European standards, so that we are no longer a Danish platform, but a European one,” states Niels Olsen, CEO at VP. The other Nordic CSDs are at various stages in their migration process, with Euroclear Finland set to join the platform in 2022. Once all of the Nordic CSDs are operating on the same platform, the foundation will be in place for a common market. “At that point, we can really begin to look at the value proposition we offer our customers, with an expanded portfolio of services and an even higher degree of efficiency than we can offer today,” Niels Olsen concludes.

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