What is T2S?

T2S has taken securities settlement in Europe a step further by addressing complex cross-border settlement procedures and the shortcomings associated with different settlement practices across national markets. Thanks to T2S, we now have a common platform on which securities and cash can be transferred between investors across Europe, based on harmonised rules and processes.

T2S contributes to the creation of a single market for securities settlement, thus furthering the integration of Europe’s financial market by:

• making it easier for investors to buy securities in other EU countries;

• reducing the cost of cross-border securities settlement;

• facilitating collateral and liquidity pooling, i.e. market participants no longer need to hold these in multiple locations and can move them swiftly to where they are needed.

By using central bank money and a delivery-versus-payment mechanism, T2S reduces the settlement risk for securities transactions, thereby fostering financial stability.

Market participants (e.g. credit institutions or broker/dealers) who want to use T2S to settle securities transactions will need a securities account with one of the central securities depositories (CSDs) connected to T2S and a dedicated cash account with one of the national central banks (NCBs) connected to the platform. These accounts exist side by side on the common platform. In other words, the settlement model is integrated to ensure fast, low-risk and efficient settlement.

For each securities transaction, market participants’ settlement instructions are processed by T2S when they enter the system. T2S then settles the transaction in central bank money on a delivery-versus-payment basis. To keep settlement fails to a minimum, T2S offers a range of technical features, such as partial settlement, and liquidity providing mechanisms, such as auto-collateralisation and other advanced optimisation algorithms.

For more details, see the technical description, as well as the T2S privacy statement on how personal data are processed by T2S in accordance with EU data protection rules.

24 CSDs from 23 European countries, together with the central banks and their local market communities, are connected to T2S.

To access the platform, a CSD must comply with the eligibility criteria set out in the T2S Guideline and enter into the T2S Framework Agreement with the Eurosystem.

Market participants usually communicate with T2S via the technical interface of their CSD or NCB using the ISO 20022 messaging standard. They can also choose to instruct T2S directly. Directly connected participants will still need accounts with their NCB and a CSD in order to settle their securities transactions.

The delivery-versus-payment fee in T2S is €0.195 per instruction, plus a temporary surcharge of €0.04 per instruction. This price came into effect on 1 January 2019, following a decision by the Governing Council of the ECB on 21 June 2018.

T2S applies the following pricing principles:

• Full cost recovery. The fees charged to participants using the T2S platform are calculated to ensure all costs are covered. There is no profit margin.

• Simplicity. The market has expressed a preference for a simple pricing structure, in which each service can easily be identified.

• Equal prices for all CSDs, regardless of the volumes settled in T2S.

• Stable pricing policy and fee structure. In other words, prices should not change frequently or significantly, but rather only when necessary to ensure costs are fully recovered.

Read more about the T2S pricing principles and price list.