Linklaters has been at the centre of the evolution of the Euromarkets for decades, having advised on the issue by Autostrade of the first Eurobond in July 1963, and regularly advising on developments since then. More recently Linklaters has been at the centre of the digitisation of the financial markets – including the Euromarkets – in the development of new platforms and the use of novel technologies as well as on thought leadership.
In another first in the market, Linklaters was the legal adviser to Euroclear Bank on the development and launch of its Digital Financial Market Infrastructure (D-FMI) which enables the creation, issuance, and settlement of fully digital international securities.
This represents the first distributed ledger technology (DLT) deployment within an EU established central securities depository (CSD) capable of supporting securities governed by English law.
CSD authorisation and Settlement Finality Directive designation brings settlements within the D-FMI within the Settlement Finality Directive and Central Securities Depositary Regulation and permits Digitally Native Notes to be fully listed and traded on an EU recognised trading venue. Critically, this means that Digitally Native Notes cleared in the D-FMI can be fully listed and traded on EU regulated markets.
This project is of particular importance as the D-FMI is also the first CSD deployment capable of handling English law securities, given that the jurisdiction of England and Wales is a leading legal jurisdiction for non-domestic international securities. In addition, as opposed to functioning in a test environment only, the D-FMI is integrated into the existing CSD infrastructure and is live for real-world transactions.
Advising on the first digital securities to be issued on the D-FMI
Linklaters subsequently advised Euroclear Bank, and TD Securities in its capacity as Dealer, on the World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA)’s issuance of the first ever digital securities on the new D-FMI distributed ledger technology platform developed by Euroclear Bank (Digitally Native Notes). The Digitally Native Notes have a coupon of 3.399 per cent, were issued at par, have a three year maturity and raised Eur100 million to support the financing of World Bank’s sustainable development activities. They are listed on the regulated market of the Luxembourg Stock Exchange and were launched, priced, signed, closed and listed yesterday in a T+0 settlement process.
By connecting to Euroclear Bank’s traditional settlement platform for secondary market operations, investors can enjoy full access to all of the Euroclear System’s core and ancillary added-value services.
Michael Voisin, Capital Markets partner at Linklaters, comments: “We are delighted to have advised on the development and establishment of Euroclear Bank’s D-FMI, which is a ground-breaking project and significant development in the journey towards increasingly digital financial markets. Both matters leveraged our deep, multi-jurisdictional expertise in capital markets, financial markets regulation, tax and technology to ensure a successful launch and the subsequent first issuance of digital securities on the D-FMI.”
Richard Hay, Capital Markets partner and UK Head of FinTech at Linklaters, comments: “Our congratulations to our clients Euroclear Bank and TD Securities, and the World Bank as issuer, for this highly innovative, ground-breaking transaction. This is another first in the digital bond markets, and a further development in the establishment of new market structures for digital securities. This will be seen as an historic step in the digitisation and evolution of the capital markets.”
Linklaters’ cross-practice and multi-jurisdictional team that advised on both the establishment and launch of the D-FMI, and the issuance of the first digital securities on the platform, was led by Capital Markets/Fintech partners Michael Voisin and Richard Hay, alongside managing associate Sam Quicke and associates Adjoa Abekah-Mensah and Megan Gosling (all London). The financial regulation team was led by partner Etienne Dessy and counsel Gilles Nejman, together with counsel Andreas Van Impe and associate Guillaume Leurquin (all Brussels). Capital Markets partner Yaroslav Alekseyev and associate Scarlett Ying (both London) advised on US securities matters and partner Gabriel Grossman and associate Bernard Yi (both New York) advised on US tax matters. Counsel Sophia Le Vesconte in Paris advised on Fintech matters. Tax partner Rhian Parker and tax associate Cora Hardy (both London) advised on UK tax issues.
