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A direct link (e-link) between the central securities depositories of Finland and Sweden was opened on June 3 2002. The Finnish Central Securities Depository has similar links with Germany, France and the Netherlands and a link to Switzerland through Germany.

The e-link enables reliable and effective settlement of both Finnish and specific foreign securities. The purpose of the direct link is to promote cross-border investment and offer new possibilities in securities clearing and settlement. In addition, the link enhances barrier-free portfolio management. The link between Sweden and Finland offers new opportunities particularly for companies listed on both the Helsinki Exchanges and the Stockholm stock exchange (Stockholmsbörsen).

The transfer of foreign securities via the e-link benefits investors because no knowledge of foreign market practice relating to settlement and clearing is required from the investors and they can do business through their domestic contacts. Equity securities, Finnish Depositary Receipts (FDRs), subscription rights, warrants, bonds and other debt instruments can all be transferred through the e-link.

The e-link enables foreign securities to be cleared, settled and entered into the Finnish book-entry securities system. All securities transferred to Finland via the e-link will be handled and transferred as book-entries in the Finnish book-entry securities system and deposited on the book-entry accounts of investors in Finland. No additional book-entry accounts need to be created. Thus, the investors have a wider range of securities to invest in at lower settlement and depository costs. The link is based on Swift messages and the payments relating to transfers are managed outside the link, so the transfers are made free of payment. Dividends and maturities are processed via the payment system of the European Central Bank (the Target system).

Gunnar Westerlund

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