MIP OnLine - 2017

Editorial

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

March 2017

Two months in and already so much to say! 2017 looks set to be a busy year and we want to ensure that you are kept updated on our journey towards financial market integration. We will do this via short and engaging articles right here. I also encourage you to follow our journey on twitter @T2SECB and via our LinkedIn group ECB: market infrastructure and payments.

On 6 February the successful migration of six central securities depositories (CSDs) from Austria (OeKB CSD), Germany (Clearstream), Hungary (KELER), Luxembourg (LuxCSD), Slovakia (CDCP) and Slovenia (KDD) doubled the settlement volume in T2S. A daily average of around 500,000 transactions is now settled on the platform. As the migration of CSDs to T2S reaches its final stage with only one migration wave left, the benefits of the integrated settlement platform for securities in Europe can start materialising. A key contribution to financial market integration and one of the foundations for the capital markets union is in place. On top of being an important integration project, T2S is a true example of successful collaboration between the public and private sectors. More than 100 institutions making up the governance structure have collaborated from the very start, seeking to deliver a solution that will make Europe a better place to invest and help European businesses reach a larger investor base. I want to welcome the new CSDs and congratulate them on their successful migration. I would also like to thank the teams both within the ECB and the 4CB for their commitment and enthusiasm through this project.

Although many milestones have now been reached, the beauty of the European integration project is that it never ends. As we achieve further integration with T2S the remaining fragmentation in the post-trade market becomes more urgent to resolve. I am confident that the capital markets union will be able to tackle some of the persistent regulatory and legal barriers. In addition we are considering whether it may be worth exploring the establishment of a truly European issuance service at least for some supranational debt instruments. In this vein we will continue to engage with market participants to seek their views.

In the past months we have also given a lot of thought to the retail payments market and the possibility for the Eurosystem to launch a settlement service for instant payments in central bank money. As our lives become more and more digital there is a growing need for innovative and fast payment solutions. However, it is essential that new fragmentation is not created as national instant payment solutions emerge which are not interoperable. We are therefore assessing if we can support the market in offering a pan-European solution by developing a settlement service for instant payments: what we would call the TARGET instant payment service (TIPS). This work is done in collaboration with the market participants to identify their needs and requirements. We have launched market consultations and have held 16 information sessions across Europe to engage in dialogue with the market participants. This initiative has gained a lot of attention from the market and resulted in a high response rate to the consultation. Later this month we will dedicate an article to the TIPS initiative and the outcome of the consultations.

As already mentioned T2S has been a true example of the positive gains achieved by strong collaboration with the market. We want to continue this collaboration as we move forward and have thus decided to launch two advisory groups – an advisory group on market infrastructure for payments (AMI Pay) and an advisory group on market infrastructure for securities and collateral (AMI SeCo). The latter will also continue the work of the T2S Advisory Group. The goal is to create forums for exchange of views and to foster discussion on issues related to payments and to the harmonisation of securities settlement and collateral management. Both groups will provide input to the Market Infrastructure Board (MIB) as they steer the Eurosystem’s initiative in the field of market infrastructure.

In February 2017 the MIB said goodbye to four long-standing members - Pierre Beck, Michalis Michalopoulos, Jesús López Pedruelo and Emerico Antonio Zautzik. I thank them for their commitment and efforts over the past years and wish them all the best for their new challenges ahead. To mark the occasion, we spoke to Pierre Beck, outgoing Vice Chairperson. You can read the interview in the subsequent article.

Last but not least I want to mention a joint conference that we hosted with the EU Commission in Frankfurt on 31 January. The event brought together representatives of the financial industry and the public sector to discuss the future of Europe’s financial market infrastructure in a time of increasing digitalisation. Integration, cybercrime, innovation, regulation and the capital markets union were among the topics discussed. If you missed the event I invite you to watch the individual sessions or a summary video online.