Harmonisation

Lack of harmonisation in the post-trade industry is today a big issue for Europe. It increases costs and risks particularly in a cross-border environment. T2S stakeholders expect that the creation of a single settlement engine in Europe will act as a major catalyst for the ongoing initiatives for the removal of barriers to cross-border settlement harmonisation. In fact, the interest placed by some market participants in T2S is an indirect interest in European harmonisation.

This resulted in the creation of the Harmonisation Steering Group (HSG). The mandate of the HSG is to provide the T2S Programme Office (PO) and the T2S Advisory Group (AG) with advice and proposals regarding the T2S harmonisation activities and to deliver a progress report to the AG on a semi-annual basis. For further details please see HSG.

In addition, T2S is addressing the harmonisation issue both directly and indirectly.

Directly because, the Eurosystem has chosen to build a “lean T2S” which does not aim at replicating the national specificities which have built up in each country over the years and are often blamed by the market as the main barriers to change.

Indirectly because, market participants know that the benefits of T2S, in terms of a reduction in liquidity costs and back-office costs, will be much greater if T2S works in a more harmonised environment.

T2S will trigger harmonisation and, in turn, harmonisation will make T2S even more efficient. In some areas, harmonisation will be a direct consequence of the introduction of T2S. The very design of the single settlement engine implies the adoption of the ISO IT communication protocol and the use of a common settlement timetable across Europe. Further harmonisation will be achieved as a consequence of the T2S system specifications, and T2S standards or market practices. The work on T2S settlement efficiency, corporate actions on flows and cross-CSD settlement are some examples of this new environment. Finally, T2S will also stimulate harmonisation in wider areas which fall beyond its scope, acting as a catalyst. (Settlement cycle in Europe)

Since the ECB Governing Council’s decision to build T2S, considerable resources have been dedicated to standardisation, harmonisation and definition of common practices. One of the main purposes of these efforts is to establish an efficient cross-CSD settlement environment in the context of T2S. The T2S Advisory Group and its substructures analyse harmonisation issues and, in many cases, actively stimulate agreement on common market practices in a wide range of areas (see also Activities).

These activities are not intended to duplicate the measures and initiatives currently led by other public authorities and market initiatives (e.g. EU Commission, ESMA, Broad Stakeholder Group - BSG) but are rather complementary to them. The common goal is to achieve an integrated post-trading market in Europe.