29 November 2011

The “T2S building” is becoming increasingly visible

Building a skyscraper is always a challenge, especially when the architect implements advanced features. At first, when the excavators dig into the earth to create strong foundations for the new tower in town, the building site looks very uncanny. After some time, though, the building starts to take shape, and people start speculating even from distance about the new construction – its material, colour, future shape – and how it will fit in with the surroundings. By then, most of the space has already been allotted to companies that are going to set up their new offices in it to expand their business.

The “T2S building” is becoming increasingly visible: although the actual IT platform cannot be visited as such, its building blocks are now solid and stable.

We have had a similar experience in setting up T2S. When the project was launched in 2008, to many people, the “T2S building site” looked a bit intimidating, but as soon as the construction became more visible, stakeholders have started to think about how this new building will fit in with the surroundings and many of them are now deciding whether and how to take up “office space” in it.

The “T2S building” is becoming increasingly visible: although the actual IT platform cannot be visited as such, its building blocks are now solid and stable. One of the key building blocks is the T2S General Principles, which form the foundations of the building. These were first established in 2007 and have been fine-tuned recently to ensure that all parties share a common understanding of every statement.

Many of these principles have been incorporated in the User Requirement Documentation (URD), which in its frozen version (v 5.0.1 [3.92 MB]) constitutes the general plan of the T2S building. The general plan has been further fleshed out, with the General Functional Specifications (GFS v 4.0 [7.6 MB]) as scale model, and the User Detailed Functional Specifications (UDFS v 1.2 [19.8 MB]) as floor plan, while the guide to the floor facilities are detailed in the Business Process Description (BPD v 1.0 [3.83 MB]).

On 22 November 2011 the President of the ECB, Mario Draghi, transmitted the FA to the boards of CSDs inviting them to sign it by April 2012 or, in case they need more time to complete their feasibility studies, by June 2012.

In addition the T2S Framework Agreement (FA) which sets out the contractual rights and obligations of the Eurosystem and each contracting CSD is now finalised. The FA regulates the scope of the controlling powers of the CSDs relating to the outsourcing of their IT functions to the Eurosystem, as well as issues such as liability, protection of intellectual property rights and confidentiality. The T2S FA comprises the main document that contains all of the contractual provisions (the “core FA”) and the more technical and operational schedules that are annexed to the agreement and form an integral part of it. The schedules cover, inter alia, the T2S Programme Plan, User Testing, User Migration, Service Level Agreement, Governance, Change Management, Pricing and Exit Management. Each CSD will enter into a separate but identical FA with the Eurosystem, which will be represented by the national central bank that is relevant for its seat, or by the ECB (in the case of non euro area CSDs). On 22 November 2011 the President of the ECB, Mario Draghi, transmitted the FA to the boards of CSDs inviting them to sign it by April 2012 or, in case they need more time to complete their feasibility studies, by June 2012.

The signing of FAs is expected to take place in two rounds in April and June 2012. The Governing Council has approved a set of financial incentives for the benefit of early signatories. As summarised in the box (see T2S Project update), those CSDs that are in the first wave and sign the FA by April 2012 will pay no entry fee and will benefit from remarkable savings throughout the duration of the migration period, namely they will receive the first three month period free-of-charge, as well as a two-thirds reduction on the whole fee list for the remaining period until the end of the last regular migration wave. CSDs in subsequent migration waves will enjoy similar benefits if they sign up by April 2012, with the exception of the initial free-of-charge period of three months.

Of course, CSDs that are willing to enter the T2S building have to sign a contract, but they must also comply with the eligibility criteria for CSDs to access the T2S services. These are now set out in a Decision by the ECB, thus ensuring improved transparency and legal certainty.

Of course, CSDs that are willing to enter the T2S building have to sign a contract, but they must also comply with the eligibility criteria for CSDs to access the T2S services.

CSDs, central banks and directly connected participants will be able to access the T2S building via two communication channels, i.e. either through the value-added connection (the railway) or through a dedicated link (the motorway). The value-added connection could be seen as being like a railway service, because it is offered with a given path and services, while connection via the dedicated link is more like using a motorway, as it requires ownership of a car, the filling of the vehicle’s tank and, most importantly, a driving licence. Both solutions will soon be available for scrutiny. For more information, please see the T2S project update.

As mentioned previously, the T2S building is becoming more and more visible, even from a distance. The 4CBs have already developed about 50% of the T2S software. According to the T2S Plan, the Eurosystem is required to deliver all the building blocks of T2S by December 2011 in order to meet the first Synchronisation Point (SP1). The SPs are milestones in the T2S Plan, whereby a number of activities have to be completed within a certain period in order to keep the construction plan on track. SP1 will be met in December, thus enabling the CSDs to draw up detailed feasibility studies by June 2012. At that time, the Eurosystem will have a few weeks to fine-tune the process so that the second SP can be met in August 2012. This is essential for composing the T2S migration waves and testing groups.

Precisely testing is the next challenge ahead of us in terms of complexity, size of the systems and interdependencies within the system landscape.

Precisely testing is the next challenge ahead of us in terms of complexity, size of the systems and interdependencies within the system landscape. Of course, during the testing phase we will be checking that T2S is ready to go live, but this process involves several levels of checks. First, the completion of the Eurosystem Acceptance Test will enable the User Testing phase to be launched. In parallel, connectivity testing will be performed and, upon completion of these two testing activities, the interoperability testing can be performed at both the bilateral and multilateral levels. The final community testing phase will ensure the acceptance of the system by CSDs and NCBs that will operate in T2S.