We are happy to announce the publication of a new issue of T2S OnLine. In his editorial, Jean-Michel Godeffroy, Chairman of the T2S Board, explains the motivation behind the recent organisational changes within the European Central Bank in the area of market infrastructures and payments. Marc Bayle, Director General Market Infrastructure and Payments, provides a comprehensive update on the T2S project. We speak to Paul Bodart, member of the T2S Board, about Europeâ€™s new settlement cycle T+2, and provide a summary of the technical session on T2S user testing and migration that took place on 25 June. In an interview, representatives of CSDs and national central banks provide insight into their preparations and expectations as pilot testers.
We hope that you will enjoy this issue of T2S OnLine.
See also the latest publication on T2S harmonisation: a mid-year update on the status of T2S markets.
Mario Draghi, President of the ECB, opened the joint ECB-Commission conference on â€śPost-trade harmonisation and financial integration in Europeâ€ť (19 March 2013), stressing the key role of T2S as driver for European financial integration : â€śIn terms of infrastructure, T2S is the necessary platform for setting up a single European market for securities services.â€ť Read the full text of the speech or watch the video
Speaking at the 7th EMEAP-Eurosystem High-Level Policy Dialogue on 26 July 2014 in Bangkok, Thailand, Yves Mersch, Member of the Executive Board of the ECB, highlighted that â€śthough initially conceived as specifically European, T2S could also have value in other regions of the world that are looking to improve their post-trade processing infrastructure beyond national borders, while respecting the different national identities and legacies." Read the full speech.
At the Nordic Back-Office conference on 27 March 2014, Jean-Michel Godeffroy, Chairman of the T2S Board, spoke about the exciting phase that awaits the T2S Community: â€śWe still have 15 months to go before T2S begins operations. This sounds like a long time, but in fact 15 months represent only 12% of the T2S project phase. A very busy 12%, mind you! We are in a crucial year for T2S, and in particular for its many stakeholders in Europe; 2014 is the year in which T2S will be delivered to CSDs and to their users so that they can start testing the adaptations they have made for T2S.â€ť Read the speech.
The T2S project is owned and operated by the Eurosystem, with a close involvement of all relevant stakeholders in the governance framework. The implementation of T2S will significantly reshape the post-trade infrastructure in Europe, affecting a wide variety of market players. The governance arrangements in place for the project ensure that the needs and requirements of all stakeholders are taken into account.
Read more about the new T2S governance structure, which has been in place since 1 July 2012. The nomination of members for the CSD Steering Group, the T2S Advisory Group and the Technical Groups is currently on-going, and more information will be provided as soon as it is available.
The T2S Board is a streamlined management body in charge of developing proposals for submission to the Governing Council on issues of strategic importance to T2S. The Board is responsible for the day-to-day management of the project, as well as for relations with stakeholders and the 4CB (Banque de France, Banca dâ€™Italia, Banco de EspaĂ±a and Deutsche Bundesbank). It is made up of members from Eurosystem and non-Eurosystem central banks as well as from the private sector; however, they do not represent their home institutions â€“ rather, they act exclusively in the interest of the Eurosystem and the T2S Programme.
The CSD Steering Group (CSG) is responsible for articulating and coordinating the views of participating CSDs within the T2S governance framework. The CSG can give advice and make resolutions on any issue related to T2S, and in particular on issues related to the Framework Agreement and its schedules, issues of major interest to T2S (pricing, risk, etc.) and the prioritisation of change requests.
The T2S Advisory Group (AG) advises the decision-making bodies of the ECB on both technical and policy issues concerning T2S. From the very start of the project, the AG has been an important forum, enabling all stakeholders â€“ i.e. participating CSDs, banks and national central banks, represented in equal number â€“ to make their voices heard. In particular, the AG addresses T2S issues related to policy, pricing, governance, and harmonisation in the field of securities settlement.
The AG is supported by the substructures listed below, which comprise representatives of national central banks, central securities depositories and other market participants:
Harmonisation Steering Group
Sub-Group on Corporate Actions
Sub-Group Message Standardisation
Task Force on adaptation to cross-CSD settlement in T2S
To support the development and implementation of T2S, the National User Groups (NUGs) bring together providers and users of securities settlement services within their local markets. The NUGs thus form the link between the T2S Advisory Group and the different national markets, and they assess how the latter are affected by T2S.
To support the T2S governance bodies, the T2S Framework Agreement foresees the creation of three sub-structures, or â€śtechnical groupsâ€ť, which are presented below.
The Project Managers Group (PMG): this group, which reports to the T2S Board, is in charge of ensuring that T2S goes live and that all participating central securities depositories (CSDs) and national central banks will be ready on time.
The Change Review Group (CRG): this group, which reports to the CSD Steering Group, is in charge of assessing and preparing change requests.
The Operations Managers Group (OMG) this group, which reports to the T2S Board, is responsible for developing and maintaining the Manual of Operational Procedures.
The T2S info sessions, organised by the ECB on a regular basis, serve to provide all interested stakeholders with information on the progress of the T2S project, as well as to gather feedback from the market on current proposals.
The ECB also organises ad hoc meetings/workshops, to address particular topics or for particular stakeholder categories. These meetings are usually open to all stakeholders and do not fall under the project's governance structure.
T2S will significantly reshape the European post-trading landscape, thus impacting a wide variety of stakeholders. All stakeholders categories are involved in the project to the highest possible extent. more
Central securities depositories (CSDs) will move their securities accounts to the T2S platform for settlement purposes. CSDs will remain responsible for the relations with market participants. Rights and obligations of CSDs towards the Eurosystem will be regulated by the T2S Framework Agreement, a contractual arrangement signed by a first group of 23 CSDs by end of June 2012.
T2S will bring about several benefits for European banks in terms of cost savings, efficiency gains and new business opportunities.
To ensure that T2S fulfils their needs, banks have been involved in the project since its very inception, most remarkably in the definition of the T2S User Requirements. Banks also participate in the governance of the project, both in the Advisory Group and in the National User Groups (NUGs).
T2S will be developed and operated by the Eurosystem on a non-profit basis. The central banks of the Eurosystem are therefore key stakeholders in the T2S project.
The central banks participating in T2S will hold central bank money accounts for CSD customers on the single platform. In addition to the Eurosystem central banks, a number of non-euro area central banks have shown interest in joining T2S. Some of these are also considering the possibility to use T2S for settling securities transactions denominated in their national currencies.
All central banks that have shown interest in T2S participate in the governance structure both at the European and the national levels.
In addition to CSDs and banks, a number of other stakeholders will be affected by T2S. To ensure that they are well informed about the project and have the possibility to flag their concerns, the T2S team of the ECB holds dedicated workshops for funds, issuers and liquidity managers.
All stakeholders are also involved in the T2S Info Sessions organised every quarter in different European locations.
The program contains the core planning of the T2S project. It includes the synchronisation points which need to be achieved for the go-live of the project in 2015. This plan is crucial for the smooth adoption of T2S by all stakeholders. more
The T2S history dates all the way back to 2006 when the Governing Council decided to explore the opportunities of a single settlement platform in Europe. more
Post-trade harmonisation is a key objective for the T2S Community. T2S efforts are primarily focused on core settlement topics. In addition, T2S is triggering harmonisation in many areas, even beyond pure settlement, thus maximising the benefits of a single settlement engine and contributing to financial integration in the EU. more
Harmonisation has been an important work stream of the T2S project since it was conceived, and action has intensified over time under the lead of the Advisory Group and the Harmonisation Steering Group. The focus is now on those harmonisation activities that are essential for a successful launch of the T2S single settlement platform (for example, messaging, operating hours and deadlines and legal harmonisation). more
The T2S harmonisation activities are carried out in close cooperation with the other relevant EU authorities, especially the European Commission. Know more about the main post-trade harmonisation activities in Europe and their impact on T2S. more
One of the crucial workstreams in the current phase of the project is pricing: in particular, how much T2S will charge for standard delivery-versus-payment (DvP) settlement. The ultimate goal is for T2S to be one of the lowest cost settlement platforms in the world.
Being a topic of high interest to all stakeholders, pricing is defined and discussed in close cooperation with the T2S Advisory Group. more
The economic impact assessment of T2S shows how an integrated European post-trading market infrastructure will have positive effects for market participants as well as the European economy in general.
The T2S pricing structure and fee list have been defined on the basis of some principles agreed upon by the T2S Advisory Group.
The T2S pricing structure illustrates how many different settlement service items will be charged for, and what proportion of costs will be recovered by information services, i .e. reports and queries. The pricing structure has been discussed with the market on many occasions.
The ECB Governing Council has decided that the delivery-versus-payment price for T2S will be set at 15 cent per instruction for the period from September 2014, when T2S will go live, to December 2018, on a number of conditions.
The price list shows in detail how much T2S services will be charged.