Securities services firms and regulators in Asia are looking to adopt similar asset servicing and connectivity solutions to those deployed for TARGET2 Securities (T2S) in Europe.
The pan-European securities settlement platform has been fully rolled out this, after the final wave of markets went live in September.
While a similar platform has yet to be rolled out in the Asia-Pacific region, largely due to fragmentation, there are characteristics of T2S that firms in Asia are looking to implement.
“We have taken a lot of what we have learnt in Europe, and while you cannot directly take T2S into Asia, there are a lot of things we have worked on, be it the account operator product offering that we have extended into Asian markets that support the legal framework,” said Satvinder Singh, global head of securities services, global transaction bank, Deutsche Bank.
“Asian regulators want to talk about T2S as a theme, they understand there is no Asian regulatory framework, but given what we have learnt from the connectivity of markets to the value of component products, they want to know what the potential is to adapt these themes into the Asian markets.”
Singh said at some point in time, market infrastructures and regulators will converge, making a T2S-style solution more likely for the Asian market, providing further opportunities for sub-custodians in the region.
Many US firms have gained access to T2S through their sub-custodian partners, such as State Street’s T2S mandate with Deutsche Bank which was signed last week.
The mandate with State Street represented one of the largest sub-custody mandates of the year, with Deutsche Bank now providing T2S services for three North American global custodians.
Singh added the mandate win represented years of investment into its T2S asset servicing solutions.
“We have the asset servicing-only solution; we have the account operator solution, so we are flexible because we understand T2S is not a pure sub-custody solution for investors,” Singh said.
“We have not built or sold T2S as a standalone offering and clients have not appointed us with an off the shelf offering, we have listened and worked with our client community as the value lies in the cash, securities, collateral mobilisation and liquidity optimisation.”