TARGET2-Securities (T2S) has been a success because of its governance structure, which involves an incredible team of people across institutions, according to Marc Bayle de Jessé, director general, market infrastructure and payments at the European Central Bank (ECB), in a special T2S report.
Bayle de Jessé explained that the T2S governance structure has fostered collaboration across the board and made sharing responsibilities easier.
Bayle de Jessé said: “Also instrumental to the project’s success has been the role of T2S as a catalyst for harmonising the post-trade market in the EU and beyond. A third crucial element is the significant collateral and liquidity savings that T2S has generated for participants.”
He also indicated that T2S has been “instrumental in moving discussions on post-trade harmonisation from a purely theoretical dimension towards a tangible action plan and has provided banks and intermediaries with a single pool of collateral for the entirety of their European business”.
When asked why did the European central securities depositories (CSDs) chose to join T2S, Jesús Benito, CEO at Iberclear and chair of the T2S CSDs steering group, said: “I am not going to deny that at the very outset of the T2S Project in July 2006, CSDs were reluctant.”
He added: “T2S has been a catalyst to foster the harmonisation of post-trading in Europe.”
Eric de Gay de Nexon, head of strategy, market infrastructures and regulation,
Société Générale Securities Services, affirmed: “T2S has attracted the main CSDs and most European settlement volumes onto a single platform; it also gives a significant and constant impulse to harmonisation and standardisation work.”
“T2S has become a forum for sharing items and defending concerns in the post-trade area. I think the governance that the ECB has put in place to manage its market infrastructure projects is highly efficient and is one of the main benefits that T2S has brought to the European post-trade community.”
On the subject of progression and looking to the future, Mérère highlighted: “there are indeed still some standards that have not been completely implemented”.
“Corporate actions are probably the main area where progress still needs to be made (because it is probably the most complex to tackle).”
He added: “However, it is important to point out that a lot has already been achieved and to highlight that the harmonisation process is not a ‘once and for all’ type of approach—new areas for harmonisation continue to be addressed.”
Dominique Le Masson, senior coordinator for market infrastructures, BNP Paribas
Securities Services/BNP Paribas Group, conveyed: “The true test is whether T2S can deliver the three key benefits set out by the ECB—deeper market integration, cost reduction, and improved bank collateral and liquidity management.”
She added: “The platform is proving reliable and scalable, plus it is feature-rich, but there are still legal, fiscal and other barriers preventing participants from fully leveraging T2S benefits.”
Discussing the same subject, Mehdi Manaa deputy director general, market infrastructure and payments at ECB, surmised: “ECB European issuers need to be able to collect funds from investors across the continent in a fair and well-defined manner.”
“The T2S community is well-positioned to propose possible solutions, which the ECB will certainly take into serious consideration.”
Patrick Pearson, head of the financial markets infrastructure unit, at the European
Commission, said: “The creation of a common platform for payments and the launch of TARGET2 in 2007 marked the start of an impressive journey. T2S then widened the scope from cash to securities.”
He added: “A key project for the future will be developing the Eurosystem Collateral Management System, thereby crossing another harmonisation gap on the road towards a capital markets union. We are looking forward to working closely with T2S stakeholders to help achieve that important milestone.”
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