Who is behind the T2S harmonisation agenda?

(Continues from the spotlight)

In opening the first HSG meeting, Chairman Yvon Lucas said that the T2S project relied on the harmonisation efforts, and that the newly created steering group would carry out its work focusing on the ultimate objective of achieving an efficient T2S settlement environment prior to the T2S launch date (September 2014).

In such an environment, market participants would be free to decide whether to consolidate their back office activities throughout the T2S markets, and eventually to access them via a single T2S entry point (i.e. the investor CSD).

The work of the HSG is not to impose a single business model on all, but instead to create the conditions for market participants to be able to make their future business choices. The HSG’s members confirmed a number of key issues which they agreed would underpin the strategy for the T2S harmonisation work, as outlined below.

• First of all, single rules on market practices will be the essential complement to a good T2S IT platform. To put it in the words of an Advisory Group member, “complexity cannot be automated”;
• Second, the T2S single entry model can be used by market participants only if CSDs provide efficient investor CSD services (i.e. asset servicing on foreign securities). Harmonisation of national specificities will help CSDs or other entities to provide these services;
• Third, the future market set-up is not prescribed by T2S, but T2S and the harmonisation work will create the conditions for market participants to be able to formulate their decisions;
• Finally, it was acknowledged in the HSG that harmonisation may come at a cost for local markets in terms of adaptation investment and increased competition. However, the aggregate benefits are much higher for the EU market as a whole, as shown by several studies and will be a major step towards a single EU financial market.

At its first meeting, the HSG also identified a number of harmonisation activities which require immediate attention owing to their direct or indirect impact on the successful launch of the T2S platform in 2014. (T2S Harmonisation List - rolling version) In addition, the group agreed on a methodology to maintain the list of activities and, most importantly, monitor progress.

In reference to the HSG’s way of conduct, the chairman of the T2S Programme Board, Jean-Michel Godeffroy, commented during the meeting that “we should be modest and tough”. The HSG should be modest in terms of being realistic and not duplicating initiatives undertaken elsewhere, and in focusing on the removal of barriers to the launch of T2S. The group should be tough in adopting a clear and transparent traffic light approach. This will clearly signpost progress achieved or delayed in each T2S harmonisation activity and will enable the T2S Advisory Group to send clear messages to national markets and relevant actors.

Today, the HSG is at the core of the T2S harmonisation agenda, supporting the work of the Advisory Group. It will be interesting to follow the work of this group and see how it will give a concrete boost to T2S and the wider post-trade harmonisation work in Europe, in cooperation with the EU Commission and other relevant actors.

• More information on the HSG and its meetings
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