28 July 2011

Jean-Michel Godeffroy, chairman of the T2S Programme Board

Goals are achieved with effort, commitment and strong teamwork. The Advisory Group was established in the very early days of the T2S project and represents the whole T2S community. This group is characterised by three words – “effort”, “commitment” and “teamwork” – and these are one of the reasons why the T2S project has come this far. Henry Ford once said: “If everyone is moving forward together, then success takes care of itself”. This is particularly apt as regards T2S, as our success requires that everyone moves forward together – the Eurosystem as developer, owner and operator; CSDs as our main counterparties and clients, together with non-euro area central banks; and market stakeholders more broadly as final beneficiaries of this single European settlement engine. I would therefore like to use the editorial of this issue of T2S Online to highlight the work done by the Advisory Group and report on the discussions which took place during our last meeting on 30 June and 1 July in Bucharest.

As a general remark, good discussions were again had at this meeting of the Advisory Group (see the full summary for a more detailed account).

“If everyone is moving forward together, then success takes care of itself”

The current draft of the Framework Agreement was shared with the Advisory Group beforehand to facilitate discussions during the meeting. Some concerns were raised regarding the role of the Advisory Group in the new governance structure. However, as I said during the meeting, the role of the Advisory Group has always been – and will continue to be – crucial. In a way, I see the Advisory Group as a kind of parliament for the T2S project. It is a forum in which broad discussions can take place and all views can be put forward and freely discussed. The European Parliament is sometimes referred to as the “voice of the people”. I would say that the Advisory Group is the “voice of stakeholders”, ensuring that T2S continues to meet the needs of the market. This has been the role of the Advisory Group thus far and it will continue to be the role of the Advisory Group once contractual agreements are signed with the CSDs joining T2S. Of course, the relationship between the CSDs and the Eurosystem will change with the signing of those agreements, as we will be bound by our contractual rights and obligations. CSDs will become our contractual counterparties, and we will strive for solutions in line with the Framework Agreement. However, the role of the Advisory Group as the “voice of stakeholders” will remain.

CSDs will become our contractual counterparties, and we will strive for solutions in line with the Framework Agreement. However, the role of the Advisory Group as the “voice of stakeholders” will remain.

Although the T2S user requirements were officially frozen in February 2010, the Advisory Group recently discussed some changes that it considered important for the smooth functioning of T2S. In accordance with the current change management process, the Advisory Group asked the 4CB to assess the impact of these changes in terms of cost and time. The 4CB indicated that some of the changes requested would not only have an impact in terms of cost, but also place serious strain on the current timetable. Nevertheless, the Advisory Group insisted that the implementation of these requests was essential for the efficient functioning of T2S, even if they placed strain on the current schedule. The T2S Programme Board has taken note of the strong views of the Advisory Group and adopted the changes requested, after having checked that the impact on the current programme plan will remain reasonable (with the precise impact still under investigation). Under the future governance structure, CSDs can be expected to play a greater role in accepting or rejecting proposed changes, but they have always made it clear that the views of users will be critical in their assessment, as is already the case today at national level.

The Advisory Group insisted that the implementation of these requests was essential for the efficient functioning of T2S, even if they placed strain on the current schedule

The most vibrant discussions at the last Advisory Group meeting were – again – related to the reshaping of CSDs’ infrastructure for T2S. I addressed this topic in the winter issue of T2S Online and I am pleased to see that this is becoming a key discussion point in the market. Discussions need to take place between each CSD and its users in order to agree on the form of adaptation that is most suitable for the CSD in question with a view to meeting the needs of the market and fostering a competitive position within T2S. Now that the fees for T2S services have been defined and the technical details of the UDFS have been published, there is no reason to postpone this discussion. At the European level, discussions have already begun. The Advisory Group is, in my view, the natural place at the European level to share experiences and report on progress achieved on this issue.

The Advisory Group has repeatedly asked for T2S to be more involved in harmonisation work, and we have addressed this request by establishing the Harmonisation Steering Group, which has already submitted its first progress report on harmonisation to the Advisory Group

My final remark regarding the last Advisory Group meeting concerns work on harmonisation. The Advisory Group has repeatedly asked for T2S to be more involved in harmonisation work, and we have addressed this request by establishing the Harmonisation Steering Group, which has already submitted its first progress report on harmonisation to the Advisory Group. The Advisory Group fully supports this report and has asked me to flag to the European Commission the most important areas of the proposed CSD legislation which will have an impact on T2S (letter). For more information on this new body, see “Introducing the Harmonisation Steering Group” in this issue of T2S Online.

I hope you enjoy this issue. In particular, I would like to draw your attention to our interview on T2S with Hugo Frey Jensen, Governor at Danmarks Nationalbank.