The latest migration to T2S, the European Central
Bank’s settlement platform, means the project is
back on course to deliver the wide range of benefits that had
been promised, experts claim.
Wave 4, the largest phase of the entire project, occurred
over the weekend and involved six central securities
depositories (CSDs), including Clearstream Frankfurt and
LuxCSD, joining the platform. CSDs in Hungary, Slovenia,
Slovakia and Austria also took part.
First conceived in 2008, T2S is designed to lower costs for
cross-border settlements in European securities. It also
eliminates the need for banks to hold collateral and liquidity
buffers in silos across EU markets.
Delays have damaged faith in the project while connection
costs have been high and transaction volumes well below what
many had expected.
However, this weekend’s migration means that
that more than 80% of the European securities migrating to T2S
now settle on the platform.
"This successful stage of the project puts to bed any
concerns raised in Wave 4 market testing that caused some
institutions to question the benefits T2S will deliver," said
Tom Casteleyn, head of product management for custody, cash and
FX at BNY Mellon.
"With most major CSDs now directly connected to T2S, it is
time for the industry to focus on realising the settlement
efficiencies and collateral management opportunities the new
market infrastructure offers."
Equally, Casteleyn said firms should not lose sight of the
fact that some of the markets that have already converted to
T2S have not yet fully conformed to the T2S harmonization
"Most of these loose ends relate to corporate actions and
market claims, and need to be tied up in order to generate some
of the project’s expected efficiencies," he
Clearsteam Frankfurt migration about 40% to the overall
volume on the ECB's settlement platform when it joined this
Euroclear Belgium, Euroclear France and Euroclear Nederland
connected in September last year, also adding around 40% in
corporate bonds, equities and funds for T2S markets.
Euroclear Finland will join as part of the final wave
scheduled for 18 September 2017.
Berthold Kracke, chief executive of Clearstream Banking AG,
said the conclusion of the fourth T2S migration wave "brings
T2S very close to the finishing line".
"As of 6 February, our clients will be able to consolidate
all eligible assets at our CSD Clearstream.
"Customers will be able to benefit from Clearstream's T2S
offering, which enables them to profit from unique economies of
scale as well as improved liquidity and collateral management
via the new platform," he added.