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CSDs, central banks and their participants will be able to make use of the T2S services via two communication channels, i.e. either through a value-added connection or through a dedicated link.
The selection process for the T2S network service providers (NSPs) offering the value-added connections has recently been launched
The selection process for the T2S network service providers (NSPs) offering the value-added connections has recently been launched with the publication of the official tender notice and the detailed selection documents on the website of the Banca d’Italia (and a related communication on the ECB’s website). Indeed, in accordance with the work allocation for T2S within the Eurosystem, the Eurosystem has mandated the Banca d’Italia to conduct the selection process and to sign a “licence agreement” with each selected NSP. For the purpose of the selection process, the interested NSPs will have to fulfil a comprehensive set of technical and business criteria, and will be asked to quote their maximum price for each connectivity service. The combination of these prices from each NSP, weighted according to the estimated importance of the various connectivity services, will result in a ranking of all NSPs, which will consequently be used to identify the two NSPs that will obtain a licence (provided they fulfil all other criteria). CSDs, central banks and their participants that want to use the T2S services through a value-added connection will have to choose one of these NSPs, but may freely negotiate the price of their connectivity services (up to the maximum quoted by each NSP). It is currently planned that the licences will be granted towards the end of this year.
Because the cost of value-added connections is typically based on data volumes actually transmitted, such connections are mainly intended to support entities with standard communication needs. Entities that expect to exchange large data volumes with the T2S platform, in particular to support real-time additional services like securities lending-borrowing, are likely to find the dedicated link a more cost-effective alternative. Via this type of connection, the value-added connectivity services are not delivered by an NSP, but are offered directly in T2S (by the Eurosystem) and in the systems of the T2S actors using such a connection. Besides the one-off implementation costs, entities using a dedicated link will only incur costs relating to the basic (mainly physical) connectivity, which are determined by capacity (i.e. bandwidth) rather than volume.
The Eurosystem believes that the competition thus created between NSPs and between communication channels is the best guarantee of high quality, cost-effective connectivity solutions for T2S.
With respect to this basic connectivity, the Eurosystem is considering two alternative options. One option would be to provide a so-called “concentrator”, consisting of a few access points close to the T2S data centres. Dedicated link users will then need a provider of their choice to reach the concentrator. The other option would be for the Eurosystem to provide end-to-end connectivity services directly via CoreNet, the Eurosystem’s existing communication network, which has access points distributed all over Europe. The Eurosystem intends to make a choice between these two options before the end of this year.
With this overall T2S connectivity strategy, the Eurosystem provides CSDs, central banks and their participants with the option to select the communication channel that best allows them to meet their individual T2S business needs. The Eurosystem believes that the competition thus created between NSPs and between communication channels is the best guarantee of high quality, cost-effective connectivity solutions for T2S.
