Five years ago, the first nine Central Securities Depositories (CSDs) signed the agreement with the Eurosystem to set up the pan-European settlement platform TARGET2-Securities (T2S). T2S set out to reduce settlement cost in Europe, increase cross-border activity, move settlement to a common platform and thereby address some of the Giovannini barriers, identified as major obstacles to an efficient market infrastructure.
Today, 18 CSDs, representing 16 markets, have already migrated to T2S, bringing more than 80% of the total volume to the platform – and the fifth and last migration wave is approaching fast.
Over the past years, a major transformation in European post-trade has been set in motion”, said Marc Robert-Nicoud, CEO of Clearstream Holding AG, when announcing the company’s monthly figures. “The harmonization objective requires both infrastructure development and a change in market behavior. T2S migration has not yet translated in market participants changing their model to take full advantage of the T2S benefits.
With Clearstream’s migration to T2S earlier this year, volumes on the ECB platform have doubled to 500,000 transactions per day. Cross-border activity in central bank money through T2S remains a small fraction of these volumes.
When contributing to market safety and efficiency, market harmonization should be welcome by all market participants. We continue to develop T2S driven solutions in close cooperation with clients and other market infrastructure providers to ensure that T2S delivers on its pan-European ambitions”, said Robert-Nicoud. “We see these efforts as critical to ensure that the market gets the benefits of the investments made over the last years.
Currently, legal barriers still make it complex to hold securities cross-border. This leads to higher costs for transactions and causes uncertainty among investors when exercising their rights abroad. Further measures, such as a reduction in the realignment fees charged by CSDs to each other as part of their cross-border links, are therefore essential in order to increase the attractiveness of doing business cross-border in T2S.
Financial infrastructure providers, such as Clearstream, are developing new services to support market participants harness the opportunities offered by T2S. Following its own migration, Clearstream launched its enhanced integrated service offering, spanning all of its three CSD entities (Clearstream Banking Frankfurt as German CSD, Clearstream Banking Luxembourg as international CSD (ICSD) and LuxCSD as Luxembourg CSD). This allows its customers to connect and access all three CSDs and their related services via one single platform.
Customers can choose between an ICSD account that provides commercial bank money settlement and asset services across more than 50 markets and currencies, and a pan-European Investor-CSD account that provides central bank money settlement and asset services across all EUR markets, or a combination of the two.
April volumes report table below:
