JP Morgan director says CSD charges are unsustainable

The costs of infrastructure associated with T2S need to come down before implementation, according to the T2S program director at JP Morgan.

Speaking at an event hosted by BNP Paribas, Alex Dockx spoke of how there must be an emphasis on reducing costs after the proposed implementation of the final wave in 2017.

“It’s crucial that we finally get the economical benefits out of T2S, which is mainly an issue of reducing infrastructure costs.”

“What we have seen as users is that so far the infrastructure costs have remained high which is understandable because systems needed to be built, but after the final wave of implementation these costs need to come down,” said Mr Dockx when referring to CSD transaction charges.  

The T2S platform is a Eurosystem-led initiative designed to create a single European settlement platform.

Its proposed benefits were said to include harmonised European settlement rules as well as reduced settlement and infrastructure costs.

Dockx also spoke of alternative ways in which infrastructure costs could be reduced.

“Another way to reduce these costs is potentially add more volumes to T2S whether its funds, whether its Eurobonds, whether its more markets this is a logical next step.”

“This would leverage all of the investments that we have done collectively in order to make this platform more efficient,” added Dockx.

The estimated savings for brokers, custodians and banks as a result of the T2S initiative have been touted as being anywhere between €30 and €70 million.

However, as Global Custodian reported in February, Clearstream Chairman Jeffrey Tessler has suggested that these savings would be harder to achieve than initially thought.