Market infrastructures at odds with slow progress to overcome post-trade barriers

Panelists at AFME's Post-Trade conference in London argued T2S has failed to lower costs, enhance efficiencies, and overcome post-trade barriers.

By Joe Parsons

Senior figures from Europe’s market infrastructures have slammed the slow progress made by regulatory bodies to overcome post-trade challenges.

Speaking at the AFME Post-Trade conference in London, representatives from Europe’s central securities depositories (CSDs) argued that while initiatives such as TARGET2 Securities (T2S), the pan-European settlement platform, have done a lot to achieve harmonisation, it has failed to lower costs, enhance efficiencies, and overcome post-trade barriers.

“T2S has been positive because of harmonisation and number of new services it has brought about, but it is measured against its objectives which is to reduce costs and make access to European settlement easier and effective, it hasn’t delivered what it was supposed to,” said Guido Wille, member of the executive board, Clearstream.

“It is actually more expensive to set up T2S access, and has not enabled easier access to European securities settlement.

“T2S is a good example of achieving progress from the ECB, but it has not gone down all the way as it has had added another layer of cost without enabling better access. The ECB should take responsibility for full execution of the project, but that hasn’t happened because of all the barriers.”

Roger Storm, head of regulation, risk and committees, at SIX explained its Swiss-based CSD is a user of T2S, however because of all the barriers it is not using the settlement platform to access the whole pan-European region.

“So much so that it is forcing us to maintain separate access points, which is costing us a lot,” said Storm.

As a result, the panellists believe it is now up to regulators such as the European Central Bank (ECB) and European Commission (EC) to take these challenges on and to define new post-trade practices.

“What we implicitly understood from the EPTF (European Post Trade Forum) is without a regulatory mandate, these things don’t get done because of vested interests, legacy technology, and commercial constraints,” said Andrew Douglas, managing director of government relations and CEO, DTCC’s European Trade Repository.

“The recommendations [from the EPTF] put the ball back into the Commission to come up with some rules to force people to harmonise. What matters is you won’t get to anything that is the right solution without getting rid of these barriers, and it has to be done quickly.”

Last year, a senior representative speaking at last year’s AFME Post-Trade conference explained it is in fact the market’s responsibility to come up with their own solutions in removing post-trade barriers, including tax, corporate actions and collateral issues.