MARKET INFRASTRUCTURE

T2S project must focus on cost savings, industry urges

Despite over 80% of planned volumes migrating to the ECB’s T2S projects, industry participants are calling for a refocus on the project achieving its goals.

By Paul Walsh paul.walsh@strategic-i.com March 07, 2017 4:36 PM GMT

More work is required for the ECB’s TARGET2Securities (T2S) project to achieve its goals according to a panel of industry participants.

Speaking at the Future of Clearing and Settlement event in London, Guido Wille, member of the executive board of Clearstream Banking Luxembourg spoke of how more work is required on the project despite more than 80% of volumes going live.

“People like to think that T2S is done because we have over 80% of the volumes migrated onto the platform and I think this is wrong.

“I think it would be nice if the ECB and the rest of the market took a perspective which is that the system has been launched largely successfully but what it really wanted to achieve was reduced costs for settlement and ability to operate cross-border.

“It has achieved the basis for these benefits but they haven’t been achieved yet as everyone is operating exactly as before using different settlement systems,” said Wille.

Wave four of the T2S initiative, the largest wave of the project, took place in February with CSDs from Germany, Austria, Hungary, Slovakia and Slovenia migrating to the platform.

Following the conclusion of the fourth wave of market migrations, 16 of the planned 22 CSDs have migrated to the T2S platform.

The fifth migration wave will take place in September 2017 when the markets for Spain, Estonia, Latvia and Lithuania will join the platform.

Wille also called on regulatory bodies to refocus on how the project can achieve its planned targets with the fifth wave approaching.

“It would be nice if there was focus from a regulatory perspective that the system for T2S has been launched but the focus needs to be on what is required to cross-border operations to happen smoothly across all types of settlement structures,” said Wille.

Other panelists concurred with Wille suggesting that there must now be a “radical” approach to the project rather than focusing purely on a domestic settlement point of view.