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On 21 April 2010, the Governing Council adopted the T2S Guideline (ECB/2010/2). The Guideline is the cornerstone of the legal framework for T2S and the basis for all other legal agreements to come in place in the future. The Guideline is binding for the Eurosystem national central banks, but does not create obligations on third parties. Briefly summarised, the T2S Guideline contains (i) a list of decisions reserved for the Governing Council, (ii) the roles and responsibilities of the T2S Programme Board and the 4CB and their mutual relations; (iii) provisions on the relations with external stakeholders; (iv) the basic procedures for the financial regime, the Eurosystem’s rights to the platform, CSD access criteria and other CSD related issues and eligibility conditions for non-euro currencies. The Guideline will soon be made public on the Official Journal of the European Union.
The T2S Programme Board and the Governing Council have carefully reviewed the T2S project plan. According to the new plan, CSDs will have the opportunity to start testing the T2S software in January 2014, and T2S will be ready to go live in September 2014 (see Jean-Michel Godeffroy’s editorial in this fourth issue of T2S OnLine)
In exploring different options for the future governance of T2S, consideration was given to the question of whether it would be advisable to structure T2S as a separate legal entity (SLE) during the operational phase. In order to analyse this matter, the T2S Advisory Group established a Task Force in December 2009, which focused on the business perspective and left aside the legal implementation of its proposals. During the discussion of the Task Force report at the Advisory Group’s March meeting, it emerged that market participants were prepared to accept a continuation of the current arrangement without establishing an SLE if the proper and transparent involvement of stakeholders was ensured. Most of the non-euro area central banks appeared to be in favour of a governance arrangement with an SLE, as they felt better able to control their currencies under such an arrangement. The Programme Board accepts this legitimate interest of non-euro area central banks, but considers that other governance arrangements could similarly safeguard their ability to control their currencies and allow them to ensure financial stability in their countries. Given the limited support in the market for an SLE, and the fact that the Eurosystem did not see convincing arguments in favour of an SLE at this stage, the T2S Programme Board will focus its governance discussions with the market on an adaptation of the current arrangement in a way that ensures that stakeholders’ concerns can be adequately met.
The Governing Council decided to adapt the mandate and the rules of procedure of the T2S Programme Board (to be published in due time), in particular in order to specify the roles and responsibilities of the T2S Programme Board in relation to T2S financial issues. The changes do not affect the external role of the T2S Programme Board.
The Governing Council has decided that connectivity to T2S should be provided by competing network providers. These network providers will obtain a licence to carry messages between T2S and the CSDs (and other actors). The Governing Council has also decided to limit the number of providers to three in order to mitigate operational and project risks. T2S will act as an interface with each of the chosen providers and market participants will decide which of these they wish to use. The Eurosystem will conduct a public consultation in summer 2010 on the selection criteria and will launch in the autumn the formal selection process. It is anticipated that the T2S network providers will be selected by autumn 2011.
The framework agreement is one of the cornerstones of the T2S legal architecture and will formalise and regulate the relationship between the Eurosystem and the CSDs (see T2S OnLine, No 3, “Bayle’s view”). The T2S Programme Board intends to finalise the draft framework agreement by summer 2010 and thereafter to offer EU regulators the chance to comment on it. The Eurosystem and the participating CSDs are expected to sign the agreement in the second quarter of 2011.
The currency participation agreement between the Eurosystem and the non-euro area central banks stipulates the rights and obligations of both parties regarding the settlement of currencies other than the euro in T2S (see “Bayle’s view” for more information). The currency participation agreement is expected to be ready for signing by the end of 2010.
