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Editorial

by Marc Bayle de Jessé, Director General, Market Infrastructure & Payments, ECB

Welcome to the first edition of MIP OnLine, the new format newsletter produced by the ECB’s Directorate General Market Infrastructure and Payments (DG/MIP)! Here we will be updating you, three times a year, on all the latest developments in the field of financial market infrastructure and payments, as well as sharing fresh thinking and ideas from experts on a range of related topics.

What’s new about this newsletter?

You might be wondering why we have decided to launch a newsletter now. In DG/MIP, alongside all our usual day-to-day work, we find ourselves in somewhat of a period of reflection. TARGET2, TARGET2-Securities (T2S), post-trade harmonisation and the Single Euro Payments Area (SEPA) are examples of how we are moving closer to a fully integrated financial market infrastructure in Europe. At the same time, however, new technologies and business models are presenting new challenges and ideas that will change the way our financial architecture looks in the future.

We have used the past few months to take stock, to look around and to consider the future direction of our market infrastructure. We are taking a holistic view, considering how to prepare our market infrastructure for the challenges of tomorrow. With this newsletter, we want to provide you, the ones whom a safe, resilient and effective financial market infrastructure will ultimately benefit, with information on the latest decisions and developments in all areas of our work. This means everything the Eurosystem does in its role of operator, catalyst and overseer of the financial market infrastructure.

For example, you can expect to read about our oversight activities in areas such as the recovery and resolution of central counterparties as well as cyber resilience. We will also provide you with the latest thinking on topics such as technological innovation and progress with new harmonisation initiatives. Basically, we want to keep you abreast of what the Eurosystem is doing and why.

Tomorrow’s market infrastructure!

The review of our market infrastructure services has led the Governing Council of the ECB to launch an investigation phase focusing on three main areas: the consolidation of TARGET2 and T2S; the provision of settlement services to support instant payments; and the development of a Eurosystem collateral management system.

Over the coming months we will work closely with the respective market participants to understand their requirements and demands for new services that could be offered by the Eurosystem. To this end we will soon launch a call for candidates for technical groups to help us draft user requirements for the new integrated TARGET services.

During the investigation phase we should be bold and explore how we can advance our market infrastructure to fit the needs of the digital age. Technical innovation, efficiency and immediacy are words that not only influence our lives but also underpin how our infrastructure and the services we offer should evolve. We will assess whether or not there is a need to extend the operating hours of settlement services in central bank money to 24/7/365. Widening operating hours could help automated clearing houses offer instant clearing to their participants with less pre-funding needs. It could give banks and other payment service providers the choice either to clear instantly using the services of the clearing houses or to settle instantly using a payment system. But, as mentioned, we will assess this in collaboration with the market and jointly define the user requirements.

Internally, the Eurosystem will also explore the potential for a shared Eurosystem collateral management system for managing eligible assets used as collateral in Eurosystem credit operations. The business case for such a system will be assessed throughout 2017.

Finally, I want to end by congratulating the central securities depositories in wave 3 for their successful migration to T2S on 12 September. With Euroclear Belgium, Euroclear France, Euroclear Nederland, VP Lux (Luxembourg) and VP Securities (Denmark) now operating on T2S, the total volume of processed transactions has reached 50% of the volume expected by the end of migration in 2017. The success of the migration process was due to good collaboration and hard work by all involved. This newsletter features an article about the migration weekend and explains the impact on the transaction volume in T2S.

T2S has shown us that, when we work together, the outcome is greater than the sum of what could have been achieved alone. I look forward to continuing our collaboration and I am excited by all the opportunities that lie in the years ahead. I hope you will follow us on our journey to the future! This newsletter is intended to be a companion along the way.

This issue also includes articles on: the what and why of e-invoicing; how TARGET2 acts as a global hub for processing euro payments; and finally whether distributed ledger technology is just hype or history in the making. If there are any topics you would like us to cover in future issues of MIP OnLine, please feel free to get in touch with us. This newsletter is for you, so we want to know what you want to know!