Godeffroy T2S

• 1. T2S: from vision to realitySWIFT Business ForumMadrid, 5 March 2013Jean-Michel GodeffroyChairman of the T2S Board1

2. Table of contents1 Purpose and benefits of T2S2 Functioning of T2S3 Project status and challenges ahead4 Spanish market2 3. What is T2S?Purpose and Benefits of T2S3 4. Scope of T2S Purpose and Benefits of T2S A Service offered to CSDs for Settlement onlyRegistration of issuerNotaryChange of ownershipindebtedness and investor Functionamong investorsholdings Notary Settlement Settlement Function Function Function Custody andCustody/ asset-servicingasset-servicing Function BankingFunctione.g. coupon payments, Function Bankinge.g. lending andredemptions, stock Function*borrowing only in somesplits(I)CSDs4 5. Future EU Settlement LandscapePurpose and Benefits of T2SOne integrated settlement process(domestic and cross-border) Market Participant CSDMarket ParticipantMarket Participant Custodian CSDCSD CSD Market Participant 5 6. Impact of T2S Benefits for Users Same processing and reduced settlement fees for domesticand cross-border transactions Possibility to access all securities from one account in oneCSD: T2S makes links between CSDs easier Potential to optimise collateral and liquidity requirements Reduced back-office costs by centralising settlement and thusstreamlining interfaces New business opportunities through access to new markets6 7. Impact of T2S Benefits for Markets Higher level of competition in post-trade industry A Single Market for financial services in Europe throughharmonised clearing and settlement Reduced settlement risks on cross-border transactions topositively affect financial stability Investors can more easily diversify their portfolios Issuers can more easily reach European investors Reduced costs of capital for firms lead to economic growth 8. Table of contents1 Purpose and benefits of T2S2 Functioning of T2S3 Project status and challenges ahead4 Spanish market 9. Functioning of T2S 9 10. Indirect vs Direct ConnectionFunctioning of T2S CSD participants can connect directly to T2S but their CSD determines their access rights Client IndirectConnectivityCSD Client DirectConnectivityCSD Client IndirectConnectivity 10 11. Table of contents1 Purpose and benefits of T2S2 Functioning of T2S3 Project status and challenges ahead4 Spanish market11 12. T2S Community22 CSDs have confirmed theirparticipation, representingnearly 100% of settlementvolume in euroOther CSDs may join later butwill have to pay an entry feeSo far only the euro and DKK(as of 2018) will be settled inT2S, but other currenciesmay join later12 13. Decision-MakingT2S governance since 1 July 2012Non-euro Governors ECB GoverningCentral Bankcentral banks ForumCouncilgovernors / boardsBodiesT2SNon-euroBoardCurrenciesCSD SteeringSteering GroupGroup (CSG)SteeringBodies(NECSG)LevelSpanishadvisory Advisory GroupMarketbodiesNational User(AG)Group (NUG) ECB Technical GroupsReportingOperationsEscalation Project Managers Change ReviewManagers GroupCRG reporting to CSG Group (PMG)Group (CRG)(OMG) Technical Groups reporting to T2S Board13 14. T2S Programme StatusSP5SP6 2007 2008 2009201020112012 20132014 20152016 2017Start FinishMon Preparation Phase Tue17/07/0625/04/17 Specification PhaseDevelopment & Testing Phase EATUser Testing Phase (SP7-12)Migration Phase (SP14 - 16)SP1 SP2 SP3 SP4SP13 SP17 T2S Go-Live We are here 99% of software developed for core functions Focus is now on testing 14 15. What T2S has delivered so far Contractual agreements with CSDs and Central Banks signed T2S Framework Agreement Currency Participation Agreement Feasibility assessments by CSDs/NCBs completed Technical documentation finalised and published UDFS v1.2.1, URD v5.02, GUI BFD v1.8 in Sept. 2012 Business Process Description v1.1 in Nov. 2012 T2S User Handbook v1.0 in December 2012 Connectivity solutions to T2S selected15 16. User Connectivity Three T2S network providersto maintain competition:2 value-added and1 dedicated-line; Eurosystem licensingprocedures led to selection ofSIA/Colt and SWIFT as value-added network providers.The Proof-of-Concept phasewas successfully completedbefore the deadline; GovC decided EurosystemsCoreNet to be the dedicated-line provider. 16 17. Main challengeTimely preparation of all stakeholders Challenge: all T2S stakeholders (Eurosystem as provider, central banks,CSDs, Users) need to be ready in time for T2S go-live / migration to T2S Solution: 17 regular checkpoints (synchronisation points) to monitorprogress of all stakeholders, including:- SP 3:Confirmation of the plan (April 2013)- SP 5:Start of Internal Eurosystem Acceptance Testing (Mar 2014) By this point 4CB need to deliver T2S software- SP 6:Eurosystem Ready for User Testing (Sept 2014) User Testing environments must be set-up, and relevant training material and testing documentation delivered- SP 16: Ready for T2S Go-Live (June 2015) CSDs and Eurosystem NCBs in first migration wave need to be ready for migration (several migration waves planned) 17 18. Migration wavesWave 1 9 months Wave 2 6 monthsWave 3 5 monthsWave 422/06/201528/03/2016 12/09/2016 6/02/2017 BOGS Clearstream Banking AS Eesti Vrtpaberikeskus Depozitarul Euroclear ESES(BE, FR, NL) Keler Hungary CDCP SlovakiaCentral LuxCSD Euroclear FI Malta Stock InterbolsaExchange OeKB Iberclear Monte Titoli NBB SSS VP Lux KDD Slovenia SIX SIS Ltd VP Securities CSD of Lithuania 18 19. Market integrationA wide frame is neededT2SCSD Regulation operational legal / regulatory dimension dimensionHarmonisation19 20. EU Regulations Europe is in the midst of significant regulatory change MiFID 2 on trading; EMIR on clearing; CSD Regulation and Securities Law Directive on settlement Issuers will be able to choose where they issue CSDs will be able to more easily link with one another Users will have much greater freedom of choice where theytrade, clear and settle their trades Adoption of CSD Regulation necessary as technical standardsneed to be developed by end 2013/early 2014 Many technical and market practice barriers tackled by T2S 20 21. Harmonisation in T2S T2S harmonises settlement and thus indirectly fostersfurther alignments of EU market practices Progress is defined in line with T2S stakeholders and othermarket initiatives The Eurosystem co-operates with market participants andpublic authorities to align the harmonisation processT2S is a unique opportunity to remove Giovanninibarriers by harmonising EU post-trading21 22. CompetitionThe new framework will lead to increased competitionT2S CSDs regulationHarmonisation DVP will no longer be a Same safety and Same market practice all bilateral relationshipefficiency rules all overover Europe: nationalbetween one CSD and oneEuropeboundaries will beNCB. broken down Any CSD in T2S ispotentially in a DVPrelationship with any NCB in T2S22 23. Table of contents1 Purpose and benefits of T2S2 Functioning of T2S3 Project status and challenges ahead4 Spanish market23 24. T2S Market Compliance monitoring Status 28/02/2013Priority 1 Priority 2 T2S Markets 126 7 9 10 151620 27 T2S messages T2S messagesSchedule ofT2S CA T2S Settlement T2S Settlement Availability of Restrictions on CA market Securities ISO 20022Matching fields settlement day standards finality II finality III omnibusomnibusstandardsamount dataaccountsaccounts (CAJWG)X GGGRBBBB G BY GGGGBGBB G BZ GGYYGGBBR - No infoBXXGGGYYGBB Y BYXGRYRGGBB G BZXGRYRBYBB G BXYGGGRBGBB Y BESGGGYBBBB G BYYGRYRBBBY Y YZYGGGGBGBB Y BXZGGYYBGBBR No infoBYZGGYRYYBBR No infoBZZGYGGBGBB G BXXX GGGRYYBBR No infoBYXX GRYYGGBBR No infoBZXX GRYYBYBBR No infoBXXY YYYRYGBBR - No infoBYXY GGGGBGBB G BZXY GGGGGGBY G GXXZ GGRYBGBB R BYXZ GGGYGGBB R BZXZ GGGRYYBYR - No infoY Summary Green: 21Green:15 Green: 12Green: 5 Blue: 12Blue: 3 Blue: 22 Blue: 19Green:8 Blue: 1928/02/2013 Yellow: 1Yellow:2 Yellow: 9Yellow: 8Green: 5 Green: 14Yellow: 0Yellow:3Yellow:4Green: 1Red: 0 Red: 5 Red: 1 Red: 9Yellow: 5Yellow: 5 Red: 0 Red: 0Red:10 Yellow:2 Summary Green: 21Green:15 Green: 11Green: 4 Blue: 12Blue: 3 Blue: 22 Blue: 19Green:8 Blue: 1925/01/2013 Yellow: 1Yellow:2 Yellow: 8Yellow: 7Green: 3 Green: 11Yellow: 0Yellow:3Yellow:4Green: 1Red: 0 Red: 5 Red: 3 Red: 11 Yellow: 7Yellow: 8 Red: 0 Red: 0Red:10 Yellow:2 24 25. Preparations of the Spanish market T2S has been one of the key factors of the post-trade reform inSpain: the reform facilitates the ability of Iberclear to compete ina T2S context Iberclear is one of the Eurosystems contracting partners tooffer T2S services to its clients Iberclear has key responsibility to ensure the readiness of theSpanish market for T2S and explain the expected adaptationprocess. BUT dependent on adequate pace of regulatory reform 25 26. What will change for Spanish market participants? Auto-collateralisation Liquidity savings Same platform for securities & central bank money settlement 15 cents for domestic & cross-border settlement + CSD add-on How will adaptation costs to T2S be financed? Effectively allCSDs in Europe are renewing their settlement system at thesame time. Links? What access to securities held in other CSDs willIberclear provide?26 27. More information on T2ST2S on the web: www.t2s.eu- Publication of all relevantinformation and key documents- Access to documents of all T2Sworking groups- Spotlight on latest information onthe project- Insights on project plan, governance,pricing, harmonisation- Ad hoc sections dedicated to allstakeholder categories (CSDs, banks,NCBs, others)- Publication of quarterly newsletterT2S OnLine27 28. Thank you for your attentionwww.t2s.eu 28