ECB eyes T2S and TARGET2 merger

Following the T2S initiative, the ECB is investigating a merger between the TARGET2 and T2S infrastructures.
By Paul Walsh
The European Central Bank (ECB) is considering merging its TARGET2 and T2S market infrastructures as the next stage of harmonisation in post-trade Europe.

It is hoped that combining the two infrastructures will leverage the benefits of the real time gross settlement system (RTGS) TARGET2 with the single, pan-European platform for securities settlement, T2S.

The ECB stated this will increase efficiency, provide easier access to services via a harmonised interface and enhance the RTGS system.

It is also hoped the merger will align the use of messaging standards, reduce operating costs and improve cyber resilience.

The proposal comes as wave five of the T2S platform approaches in September, which is set to take the total number of CSDs on the platform to 22.

Wave four took place earlier this year meaning more than 85% of the total volumes have now migrated.

Initially proposed in 2006, the T2S initiative was designed to create a harmonised European settlement platform with settlement costs proposed at a maximum of 15 cents per settlement.

A harmonised structure was also proposed to give migrated CSDs a chance to increase their competitiveness across the continent as a result of moving away from the borders and monopoly structures they were used to working with.

The ECB also states the “full potential” of T2S will be reached through the addition of new markets and currencies.

The Danish krone is set to join the T2S platform by the end of 2018 which would turn it into a multi-currency securities settlement platform.