TARGET2-Securities
TARGET2-Securities ( T2S ) is a platform for the settlement of securities in the EU.
overview
A system for the settlement and decentralized custody of securities has been established in the European securities market and especially in securities settlement, which is managed by central securities depositories - CSDs, Central Securities Depository - and ICSDs, International Central Securities Depository - such as Clearstream , Euroclear , OeKB , Monte Titoli as well as banks as (global) custodians . As a result of the different national legal conditions, market practices and system platforms, a decentralized orientation in securities processing has taken place. This enables efficient processing at the national level; cross-border securities processing, on the other hand, is less efficient and associated with higher costs. With the introduction of TARGET2-Securities ( T2S ), coordinated by the European Central Bank (ECB), the European banks are to receive a uniform technical platform for an EU internal market in securities settlement.
history
The T2S project was started by the ECB in 2006. The story goes back to 2001, when the Giovannini report pointed out points which hinder the settlement of securities within Europe. In further reports from the Giovannini Commission in 2003, the problems of harmonized and free securities settlement in Europe were deepened and summarized in the 15 Giovannini barriers .
TARGET2 as a model
For cross-border European payment transactions between banks and central banks in the EU, TARGET2 was a functioning system created by the central banks of the EU in order to significantly simplify cross-border payments and reduce the associated costs. The development and operation of TARGET2 takes place in an international cooperation of the central banks involved in Germany, France and Italy. This approach is also used for European securities settlement with T2S. The development and operation of T2S will again be guaranteed by a European cooperation between the central banks of Germany, France, Italy and Spain (Banco d'Espana).
Goals of the T2S project
European securities settlement is to be implemented with T2S as the technical platform
- harmonized and simplified,
- increased efficiency,
- reduces today's high costs in cross-border traffic
become. The consistent use of central bank money for securities settlement is taken into account as a further component. It should be made easier for investors to diversify their portfolios through cross-border investments within the EU , which today sometimes fails due to the costs of cross-border securities trading and the hurdles for market access .
The T2S platform
Scope of services
T2S covers the functions of securities settlement - instruction, validation and matching of transactions up to the actual settlement . So far, these have been mapped differently in the processing systems of the CSDs. T2S enables a DvP settlement (delivery versus payment) for all transactions involving a security with an ISIN (International Securities Identification Number). However, transactions free of payment are also mapped. This means that only the securities are regulated via T2S - a transfer from bank to bank. The payments can e.g. B. via TARGET2. Both stock exchange and OTC (OTC - Over the Counter) transactions in Germany and other European countries are mapped via T2S. Even with T2S, the custody of the securities portfolio and their administration remains in the sovereignty of the CSDs and must be mapped in the systems there. The CSDs still have to map the stocks of their customers - the banks - as Depot A and B including the necessary sub-deposits (e.g. collateral). To map the disposition processes in securities processing, the securities holdings are mirrored by the CSDs in T2S. The representation of the corporate actions remains with the CSDs. These ensure that the resulting changes in stocks can also be traced in the stocks "mirrored" in T2S.
In order to enable the consistent use of central bank money for DvP settlement in T2S, a connection will be created between T2S and the banks' RTGS ( Real Time Gross Settlement ) accounts in TARGET2 . T2S brings together the securities holdings managed at the CSDs and the cash liquidity at the central banks. In addition to a netting function, this mechanism is intended to sustainably increase settlement efficiency. T2S makes it easier to use the credit facility at the central banks, since cash accounts and securities holdings are visible on an integrated platform and collateral can be provided by simply transferring them and thus overdraft lines can be used.
Connection and use of T2S
The primary users of T2S will be the European CSDs and central banks. The use of T2S is not linked to the EURO, but is open to CSDs in all EU countries. As things stand at present - as with TARGET2 - not all EU countries will take part. The connection of the countries that will take part in T2S is to take place in five migration waves from June 2015.
Direct contractual partners of T2S are the central banks and the CSDs. The banks have two options for the "technical" connection on the securities side: You can connect indirectly as an "ICP - Indirect Connected Participant" and access T2S via the CSD's processing system or, after coordination with your CSD, a direct technical connection as a DCP - Direct Connected Participant - to set instructions directly in T2S. On the money side, central banks provide money accounts, so-called dedicated cash accounts. This is done via the TARGET2 payment system, in which the euro participants in T2S hold accounts in central bank money at their central bank. These accounts provide the liquidity for the securities transactions by transferring liquidity to the dedicated cash accounts in T2S. At the end of the day, the remaining liquidity is returned to TARGET2. Non-EURO participants of TARGET2 (since 2018 also Denmark with the Danish krone) can connect to T2S via their national payment system, whereby the liquidity is returned to this national payment system at the end of the day.
The connected participants use T2S either via a web-based GUI or message-based interfaces based on UNIFI (ISO 20022) .
T2S participants
1st wave of migration (June 22, 2015)
- Bank of Greece Securities Settlement System - BOGS (Greece)
- Depozitarul Central (Romania)
- Malta Stock Exchange (Malta)
- SIX SIS (Switzerland)
Migration wave Monte Titoli (August 31, 2015)
- Monte Titoli (Italy)
2nd wave of migration (March 28, 2016)
- Interbolsa - Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, SA (Portugal)
- National Bank of Belgium Securities Settlement Systems (NBB-SSS; Belgium)
3rd wave of migration (September 12, 2016)
- Euroclear Belgium (Belgium) (postponed from 2nd wave)
- Euroclear France (France) (postponed from 2nd wave)
- Euroclear Netherlands (Netherlands) (postponed from 2nd wave)
- VP Lux (Luxembourg)
- VP Securities (Denmark)
4th wave of migration (February 6, 2017)
- Centrálny depozitár cenných papierov SR (CDCP) (Slovakia)
- Clearstream Banking (Germany) (postponed from 3rd wave)
- KDD - Centralna klirinško depotna družba (Slovenia)
- KELER (Hungary) (postponed from 3rd wave)
- LuxCSD (Luxembourg) (postponed from 3rd wave)
- Oesterreichische Kontrollbank (Austria) (postponed from the 3rd wave)
5th wave of migration (September 18, 2017)
- Eesti Väärtpaberikeskus (Estonia) (postponed from the 4th wave)
- Euroclear Finland (Finland) (postponed from 4th wave)
- Iberclear (Spain) (postponed from 4th wave)
- Lietuvos centrinis vertybinių popierių depozitoriumas (Lithuania) (moved from the 4th wave)
Originally, the 5th wave of migration was only a reserve date. Due to the delays in the project, this reserve date was now actively planned as the 5th wave.
The project status
With regard to the project status, a distinction must be made between the technical project status with regard to the development of the T2S system itself and the technical project status (development of participation in the T2S system).
Technical project status
The T2S project is currently being implemented technically after an extensive technical and functional concept has been drawn up. Development completed and T2S finally went live in 2015. However, the development phase has not yet been completed, as new versions including bug fixes are incorporated from time to time in order to ensure that participants run smoothly.
Technical project status
- On September 26, 2013, the Latvian CSD signed the T2S Framework Agreement as the 24th CSD.
- On October 16, 2013, the list of institutes that want to connect directly to T2S was published.
Effects of the T2S system on the banking landscape
Impact - custody business
T2S has an impact on banks that offer custody services for markets that connect to T2S. The need to involve a custodian in today's cross-border business is lost with T2S, as a direct connection between the CSDs that could take on this role is created via T2S.
Impact - CSDs
The CSDs must review and adjust their settlement systems with regard to changes caused by T2S. The CSDs will also review their current range of services in securities processing and change them if necessary.
See also
Web links
- Website of the ECB
- Clearstream T2S page
- T2S website of the Oesterreichische Nationalbank (OeNB)
- T2S website of the Deutsche Bundesbank