- Clearstream is the post-trade arm of Deutsche Börse Group, providing settlement, custody and fund services for securities from more than 60 markets.
- Clearstream Banking S.A. in Luxembourg is one of the world's two international central securities depositories (ICSDs), alongside Euroclear Bank.
- The group also runs Germany's CSD and Luxembourg's LuxCSD, and its Vestima platform processes orders in more than 245,000 funds.
- It is a bank and a custodian, but not a clearing house; within Deutsche Börse, that role belongs to Eurex Clearing.
- For issuers, Clearstream eligibility opens a note to international investors and works alongside Euroclear through the Bridge.
Clearstream is the post-trade services arm of Deutsche Börse Group. It settles securities transactions, holds securities in custody and processes investment fund orders for banks, brokers, custodians, wealth managers and central banks. When people talk about Clearstream in debt markets, they usually mean Clearstream Banking S.A. in Luxembourg, one of the two international central securities depositories that sit behind the Eurobond market.
Its roots go back to 1970, when a group of banks set up Cedel in Luxembourg to settle Eurobonds, two years after Euroclear started in Brussels. In January 2000 Cedel merged with Deutsche Börse Clearing to form Clearstream, and in 2002 Deutsche Börse took full ownership.
Today Clearstream provides infrastructure for securities from more than 60 markets. For an issuer placing a bond or a note with international investors, it is one of the two doors most of those investors will use.
How Clearstream works
Clearstream holds securities in immobilised or dematerialised form and records ownership by book entry. Each client holds a Clearstream account. When two clients trade, Clearstream moves the securities and the cash between their accounts at the same moment, on a delivery versus payment basis, trade by trade. That gross settlement model means each transaction stands on its own, which keeps settlement risk low.
Around settlement sit the custody services that keep a holding alive: income and redemption payments, corporate actions, tax processing and proxy voting. Clearstream also runs a large collateral management and securities lending business, grouped under its Global Liquidity Hub.
The group works through three main depositories and a fund platform:
- Clearstream Banking S.A., the Luxembourg ICSD, which settles Eurobonds and other cross-border securities.
- Clearstream Europe AG (formerly Clearstream Banking AG), the German central securities depository.
- LuxCSD, the domestic CSD for Luxembourg.
- Vestima, the fund processing platform, which handles order routing, settlement and custody for more than 245,000 funds.
Clearstream Banking S.A. connects to Euroclear Bank through an electronic link known as the Bridge, so a client of one can settle with a client of the other.
Who owns Clearstream?
Clearstream is wholly owned by Deutsche Börse Group, the Frankfurt-listed exchange operator that also owns the Frankfurt Stock Exchange, Eurex and Eurex Clearing. Its operating entities sit under Clearstream Holding AG, which is based with Deutsche Börse in Eschborn, near Frankfurt.
That ownership is the clearest difference from Euroclear, which is owned by a broad spread of market users and long-term investors. Clearstream is part of a vertically integrated group that runs trading, clearing and settlement under one roof.
Is Clearstream a bank, a clearing house or a custodian?
A bank: yes. Clearstream Banking S.A. is a Luxembourg credit institution supervised by the CSSF, with its settlement system overseen by the Banque centrale du Luxembourg. In Germany, Clearstream's CSD is regulated as a bank and supervised by BaFin. The banking licence lets Clearstream extend credit to clients so that settlement runs smoothly.
A custodian: yes. Clearstream is one of the world's largest custodians, holding securities on behalf of its clients and servicing them through to maturity.
A clearing house: no. A clearing house, or central counterparty, stands between buyer and seller and guarantees the trade. Within Deutsche Börse, that role belongs to Eurex Clearing. Clearstream settles the transfer and records ownership. For more on the difference, see our article What is a clearing system?
Clearstream vs Euroclear
Clearstream Banking S.A. and Euroclear Bank do the same core job for international debt, and most Eurobonds are eligible in both. Where they differ is ownership, home market and the wider group around them.
| Clearstream Banking S.A. | Euroclear Bank | |
|---|---|---|
| Headquarters | Luxembourg | Brussels, Belgium |
| Founded | 1970, as Cedel | 1968, by Morgan Guaranty |
| Owner | Deutsche Börse Group | Euroclear Holding SA/NV, a spread of users and long-term investors |
| Domestic CSDs in the group | Germany (Clearstream Europe AG), Luxembourg (LuxCSD) | Belgium, Finland, France, Netherlands, Sweden, UK (CREST) |
| Regulator | CSSF and the Banque centrale du Luxembourg | National Bank of Belgium |
| Fund platform | Vestima | FundsPlace |
| Link | The Bridge | The Bridge |
For an issuer, the choice is rarely either-or. A global note held by a common depositary or common safekeeper serves both ICSDs at once, so investors can hold the bond through whichever their custodian uses. For the Brussels side of the story, see our article What is Euroclear?
What Clearstream means for issuers
Luxembourg is the home of both Clearstream Banking S.A. and one of Europe's leading securitisation centres, and that proximity matters. Notes issued by a Luxembourg securitisation vehicle, including credit linked notes, are routinely made eligible in Clearstream and Euroclear, which lets private banks, wealth managers and institutions hold them alongside the rest of their bond portfolio.
The steps to eligibility are the same as for Euroclear, and are usually run for both ICSDs together:
- Appoint the agents. An issuing and paying agent applies for eligibility and handles payments to holders.
- Obtain an ISIN. For international debt, the ICSDs allocate an XS-prefixed ISIN and a common code.
- Choose the note form. A classic global note is held by a common depositary; a new global note is held by a common safekeeper and can support Eurosystem collateral eligibility.
- Document it. The terms and conditions define "Clearstream, Luxembourg" as Clearstream Banking S.A., which keeps it distinct from the German CSD.
- Pass the ICSD review. Clearstream assesses the legal and operational features of the security before accepting it.
Eligibility confirms that a note can be settled and safekept. It says nothing about credit quality. Because it shapes the note form, the agents and the closing timetable, it belongs at the start of structuring. For how the issuing vehicle itself is put together, see How Securitisation Works: The Mechanics for Issuers.
Frequently asked questions
What does Clearstream do?
It settles securities transactions on a delivery versus payment basis, holds securities in custody, manages collateral and securities lending, and processes investment fund orders through Vestima.
What kind of company is Clearstream?
A financial market infrastructure company and the post-trade arm of Deutsche Börse Group. Its main entities are licensed banks and central securities depositories.
How does Clearstream work?
Banks, brokers and custodians hold accounts with Clearstream. When they trade, Clearstream moves the securities and cash between their accounts at the same time and records the new ownership by book entry.
What is Euroclear and Clearstream?
The two international central securities depositories. Euroclear Bank is in Brussels and Clearstream Banking S.A. is in Luxembourg. They settle and hold most of the world's Eurobonds and are linked by the Bridge.
Is Clearstream a clearing house?
No. It is a central securities depository. Deutsche Börse's clearing house is Eurex Clearing.
Who owns Clearstream?
Deutsche Börse Group, which has owned it outright since 2002.
What is a Clearstream account?
An account held by a bank, broker or custodian with Clearstream to settle and hold securities. Individual investors do not open one; they hold securities through their bank or broker.
