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The AMEDA Messaging Hub
PRESENTED BY: Monica SingerTO: The AMEDA delegation
DATE: 28 November, 2010PLACE: Libya
Our Vision
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To provide AMEDA members with access to the rest of the world through Link-Up Markets and CSD to CSD links
MCDR and STRATE currently connect to Link-Up Therefore through the Hub, AMEDA countries will have access
to the rest of the world
HUB
HUB
As at the end of 2009 there were no CSD to CSD links in Africa
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MCDR and Strate on AMEDAs behalf driving the activities on the Hub project
Recap on activities since last meeting
MCDR to focus on Middle Eastern countries and North African Countries (MENA)
Strate to focus on sub-Saharan African countries
Strate and MCDR to create a link between them
HUB
HUB
As at the end of 2009 there were no CSD to CSD links in Africa
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Consensus is that technology should be an enabler not a driver in this process
International reaction to the Hub
At the ASEA meeting held in Zambia in November 2010
The main theme was that of “attracting African and foreign investors as a result of improved liquidity and transparency through CSD to CSD links”
“ A single link into Africa, would make it easier and more attractive for foreign investors to invest in Africa”
“Attracting foreign investors into the local market requires a holistic solution to trading, clearing and settlement ”
Strate’s London road show
Frustration was expressed over the current inefficiencies in local markets
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MCDR and Strate on AMEDAs behalf driving the activities on the Hub project
Recap on activities since last meeting (Cont.)
• RFI sent to all AMEDA members• RFI also sent to non-AMEDA members in the hope they
would join AMEDA as well as the Hub project• Responses received from Libya, Kuwait, Qatar, Ghana,
Zimbabwe and Zambia• Interest also shown from Kenya • Follow-ups continue with each country to determine their
specific needs and how the Hub could assist them in meeting their requirements
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Each country reflecting unique needs
Summary of RFI Responses
• There is a strong focus on decreasing technology costs• High focus on increasing liquidity and transparency in each
market• CSDs largely have not adopted messaging standards• A need to attract both AMEDA and foreign investors to
invest in the AMEDA region• Some Countries have instigated a Triparty Agreement for
the Clearing and Settlement (Egypt, Lebanon and Kuwait)• Different levels of sophistication (from world-class
technology to manual processing in many cases)
How can this be achieved?AMEDA countries need to build CSD to CSD links
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• One Access/Entry point into and out of the AMEDA region• Standardized service across markets• With multiple execution points (Sovereign rights of each
country are respected)• Clearing and settlement in home country• Assets remain in home country • Adherence to the International Organisation of Securities
Commissions (IOSCO) and Consultation of the Committee of European Securities Regulators (CPSS) principles (i.e. DVP , T+3 Settlement cycle)
• Technology is only an enabler not a driver
The Hub provides solutions for a variety of sophistication for CSDs in the AMEDA region
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OPTION 1: No CSD or CSD system
OPTION 1: No CSD or CSD system OPTION 2:
Existing CSD, without messaging standards
OPTION 3:Existing CSD, with ISO or
proprietary message standards
Possible technology solutions
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Cost analysis needs to be based on volume expectations as well as additional services which
can be offered
Costs of the solution
• Identified volumes for current cross-border transactions are very low – on average 20 transactions in total - per business day from the RFI responses received
• Information on actual cross-border transactional volume on a country-by-country basis has not been readily available
• Potential services other than messaging have been identified such as Disaster Recovery, Consulting etc.
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Strategies have been identified in the cost analysis
Costs of the solution
• Either a transactional cost only comparative to other proprietary message costs at approximately 17 Euro cents per message as well as connectivity costs, or
• A model whereby member CSDs contribute capital to the over all technology and effectively ‘buy a stake’ , such as is the model with Link-Up Markets in Europe
• The Hub will also enable the provision of other service offerings (such as Disaster Recovery, Consulting, etc.) which can be negotiated as and when the need arises
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Access to the rest of the world via the Hub
Benefits of the solution
• Access to other members of Link-Up Markets through membership to the Hub
• Access to higher levels of liquidity• Opportunities for CSDs to offer new services and move up
the value chain • Increased transparency and the mitigation of risk in
securities movements • Ability to link bi-laterally or on a regional basis
Finalization of costing model and pilots with African and Middle East countries
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Next Steps
• Finalize costing model and technology requirements • Initial pilot link between Strate and MCDR• Identify other non-AMEDA countries to approach about
joining the Hub and AMEDA
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STRATE and MCDR will become the change we want to see in the world.
Conclusion
• STRATE and MCDR as existing members of Link-Up markets strongly believe in the CSD to CSD links model
• As a result, STRATE and MCDR will build a CSD to CSD link to each other as the Hub’s first pilot
• This will allow us to create an opportunity to learn from this process and to help others to follow our example
