Navigation Path: Home > Payments & Markets > T2S > News and Publications > T2S Online > T2S OnLine - Quarterly review - Editorial by Jean-Michel Godeffroy, chairman of the T2S Programme Board
Since the last issue of T2S OnLine, which was published in January following our Advisory Group’s meeting in Amsterdam, the Governing Council has approved the Programme Board’s proposal to freeze the User Requirements Document (URD). T2S now has a rock-solid basis for its future development. Over the last few weeks the General Functional Specifications (GFS) have also been updated to incorporate the latest changes made to the URD.
Since the end of last year, the Programme Board has been carrying out an extensive review of the T2S work plan. As I also mentioned in January, this review was triggered by, inter alia, the delay in finalising the technical documentation, in particular the GFS.
The detailed plan is not yet available. This is partly because we have yet to conclude our planning discussions with the central securities depositories (CSDs). Nevertheless, I can already announce the key dates of our new and final plan: T2S will be ready for testing by CSDs in January 2014, and ready to be used by the first group of CSDs in September 2014. This is just over a year later than we had initially hoped, but we are now very confident that no further adjustments to the timetable will be necessary. The new plan includes some additional buffers in case of any unforeseen events.
Over the last few months we have also carried out a comprehensive review of our organisational set-up, and the problems identified are now being addressed. T2S is a project without precedent and we are finding our way towards new and better internal governance solutions. It was as if, having been cruising along the racing track without any problems, we have been forced by a sudden change in weather conditions to come in for a pit-stop slightly earlier than expected. But we now have fresh tyres and a full tank, and have made some technical adjustments, and are ready to go full speed ahead until the end of the race without stopping. The review has certainly strengthened our organisational structure, and we are now focusing our attention on the finalisation of the Framework Agreement with the CSDs.
The negotiation of the Framework Agreement will be, by far, this year’s most important activity. It will be the basis for contractual relations between the CSDs and the Eurosystem. There have been so many issues to deal with that we have occasionally risked losing momentum in lengthy discussions. We have had to find the right balance between the need for consensus and the need to bring the work to a quick conclusion. Another important step will be when we will seek the views of the regulators. In order to allow them to intervene early enough in the process, the Programme Board intends to submit a draft to the Committee of European Securities Regulators by the end of July, after an interim validation by the Governing Council. It will still be a Eurosystem document at that stage, but it is important that it is as close as possible to the final version. The CSDs and the Programme Board have therefore agreed to speed up their discussions in May. Two further important milestones in this dossier will be the adoption of the Framework Agreement by the Governing Council in January 2011 and then by the CSDs in April 2011.
Overall, aside from a few sensitive issues that have yet to be settled, the negotiation process has progressed well over the last three months, with both sides acting in a spirit of cooperation.
Yet another major activity for 2010 is the negotiations of the Currency Participation Agreement with those non-euro area central banks that have envisaged to allow their currency to be settled in T2S. The article in this issue by Marc Bayle, T2S Programme Manager, provides some more details on this process (Bayle's view).
One of the main issues to be addressed in both the Framework Agreement and the Currency Participation Agreement is governance. In this respect, the T2S Programme Board has analysed, with the help of the T2S Advisory Group, the pros and cons of establishing a separate legal entity.
Some stakeholders were in favour of establishing a separate legal entity for T2S. The reasoning behind this was that it could potentially lead to a differentiated governance model in which decisions relating to the infrastructure would be taken by the Governing Council, while strategic decisions relating to the operation and future development of the platform would be taken by a broader range of stakeholders. The Programme Board noted that this idea met with limited support from the T2S Advisory Group.
In its April meeting, the Governing Council requested the Programme Board to continue its work on governance without envisaging a separate legal entity. Efforts are now being focused on creating an alternative governance model that will adequately address the needs of the non-euro area central banks, as well as those of other stakeholders. I am confident that, by engaging in frank and open dialogue and by defining transparent and accurate procedures, we will be able to find a solution, which would meet the needs of all parties concerned equally well as a separate legal entity.
I am also pleased to say that in April, the Governing Council adopted the T2S Guideline. The Guideline is the basis for the legal framework for T2S and all other legal agreements to come in place in the future. You can read more about it in the T2S project update.
Let me now introduce the other articles in this quarter’s issue of T2S OnLine. We start with an update from Helmut Wacket on the latest developments in the T2S Programme. We then have an article by Roland Broese, a member of the T2S team, on the Credit Memorandum Balance: a new tool that has been introduced into the URD in order to make it easier for payment banks to manage their clients’ credit lines. There follows an interview with Adolfo García from Banco Santander, who shares his views on, among other things, pricing and governance. Next, as mentioned above, Marc Bayle, the T2S Programme Manager, gives an update on our negotiations with the non-euro area central banks regarding the Currency Participation Agreement. To round off, we introduce the T2S Advisory Group.
I hope you enjoy this issue of T2S OnLine.
