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Since the T2S project was conceived and following the commitment of the ECB Governing Council in July 2008, the T2S Programme Office (PO) and the T2S Advisory Group (AG) have been working on various initiatives on harmonisation and standardisation, in either a leading or catalyst role.
The PO and the AG are coordinating their work with other public authorities and market associations in order to define, monitor and implement a coherent post trade harmonisation framework. The T2S Harmonisation Steering Group , created in March 2011, supports and advises the AG in relation to its harmonisation agenda.
An overview of the main ongoing T2S harmonisation activities is provided below. For further details please see HSG.
The T2S adoption of the ISO 20022 message standard in the User Requirements Document is an important harmonisation catalyst for the post-trade industry.
The Message Standardisation Sub-group provides support and advice to the AG in the translation of the user requirements into message standards and in the development of T2S-related messages from a user perspective.
In T2S, all connected CSDs will use a single harmonised settlement schedule. This will lead in practice to the adoption of a single timetable for the whole European market. The main principles of the T2S schedule are part of the User Requirements Document, the General Functional Specifications [7.6 MB] and the T2S User Detailed Functional Specifications [20.2 MB] (UDFS) version 1.0.
Details regarding some critical areas of the settlement day are being defined in cooperation with market participants:
A number of T2S initiatives have been undertaken in the last few years to ensure the efficiency of matching and settlement in T2S:
The management of corporate actions services to CSDs and market participants is not part of the T2S scope. However, there is a need to standardise the interactions of T2S actors with the T2S services in order to manage the settlement of corporate actions in T2S.
There are a number of issues that require regulatory and possibly legal harmonisation action from the public authorities. These include among others the three different notions of “finality”, two of which are touched upon in the Settlement Finality Directive (SFD) and the regulatory framework for outsourcing CSD services.
The HSG is advising the AG in formulating the right action plan for achieving agreement on these topics via the work of the T2S Framework Agreement and the appropriate actions of escalation to the EU Commission.
Further work is ongoing on the proposal of establishing harmonised rules for a Settlement Discipline Regime and a harmonised Settlement Cycle in the EU, see current activities of the Harmonisation Steering Group.
The AG is also monitoring the progress in the EU Commission’s actions on the harmonisation of transaction and withholding tax procedures in the EU (see work of T-BAG).
Following a request from issuers and their agents, the AG established in December 2009 the Shareholders Transparency Task Force. The mandate of the TF was to analyse the possibilities of harmonisation in shareholder transparency rules and procedures in cross-border settlement in the context of T2S.
The Taskforce has subsequently prepared its final report and presented it at the Advisory Group meeting on 7 March 2011.
The issuance and settlement process for investment fund shares is very heterogeneous across Europe. The Funds industry has expressed the request that T2S plays a catalyst role in assisting the European funds market to harmonise these practices across Europe. The impact of the possible migration of fund share settlement into CSD accounts is under scrutiny with the relevant stakeholders.
The Funds Association (EFAMA) established on 2010 a T2S working group on funds in order to explore the possibilities of funds shares settlement in T2S (i.e. for those market that are currently settling outside the CSD environment)
The T2S Programme Office has established a dialogue with the industry in order to clarify the processing of fund shares settlement in CSD accounts in T2S.
