A 'big bang' approach to securities processing at the time of the changeover in the markets to Emu at conversion weekend at the beginning of 1999 has been recommended. The City of London-based global custodians EMU forum, formed last year to consider the position, has drawn up a series of recommendations, endorsed by the 13 global custodians members.

As December 31, 1998 will be a non-trading day in participating countries, custodians should accept settlement instructions from clients up to normal cut-off times on December 30, with instructions only being accepted on the following day on an exeptional basis".

The conversion process should start once reconcilation has been completed, with the aim of finishing by midday on January 2. "Cash accounts should be redenominated into euro or new accounts established in the euro and legacy currency balances should be converted to euro," says the forum.

Regarding open trades, including failed trades and repos, it says these should be converted to reflect settlement in euro without the need for notification, rematching or reinstruction to the market".

Once the conversion and redenomination is complete, custodians should make statements to clients of their positions in the relevant markets.

But the forum points out that individual custodians may want to adopt "a variety of additional approaches" in their dealing with clients."

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