Nordic CSDs Face Turning Point in 2014

The preparation of settlement platforms in the Nordic region to connect to TARGET2-Securities (T2S) will intensify this year, an audience of securities industry professionals at SEB’s Northern Thoughts day, heard.

Göran Fors, Asset Servicing in SEB, who is also chairman of the user group for the connectivity of Nordic CSDs to T2S, gave an overview of the state of readiness of the region for the introduction of new settlement platform for Eurozone securities in 2015. In Denmark, VP Securities and VP Lux with go live in September 2016 for euro denominated securities only. Separately, VP Securities has a strategic objective for the migration of Danish denominated securities in 2018.

Euroclear Finland will implement a new core settlement system for bonds in November 2014 and for equities in Q4 2015. The CSD is using Tata Consultancy Services’ BaNCS real-time settlement system, which is also in use in a number of CSDs around the world, to connect to T2S in February 2017.

“They have an extremely tight project and that they have to make sure they implement and they have to make sure they are ready for testing in 2015,” says Fors. Norway VPS will introduce a new core system. The required documentation is still under production and by the end of the year the CSD will invite bidders to provide the technology for the new system, the audience heard.

The CSD has also expanded in fund services and collateral management and is co-operating with Clearstream on the former service. “It also has a clear strategy to join T2S in 2018 or 2019,” says Fors.

Sweden has undertaken a lot of work to analyze who it will act in the future environment, says Fors. “Sweden’s consolidated market infrastructure has been transferred to Euroclear data centers, but it has made no decision on whether to replace the core system or not.

“If Euroclear roles out BaNCS in the region it will be easier. It’s going that way, particularly with Sweden but there has been no decision on this yet.
“2020 has been mentioned recently as a possible date but me saying that as chairman of the user group does not necessarily mean that it will happen. We will work with the ECB’s Michel Godfrey who is visiting in March, but 2020 is not a decision, it’s just a possible date.”

Additionally, all Nordic markets will move to T+2 on Oct. 6 this year.