Open Day 2016 T2S: preparing the step onto the platform Volker Riebesell 5 October 2016
Open Day 2016T2S: preparing the step onto the platform
Volker Riebesell
5 October 2016
Contents
Open Day 2016
02 T2S intro 07 T2S wave 4 – customersimulation
04 Status T2S 10 Customer readiness
05 Roadmap 14 T2S migration weekend
06 Customer involvement and information 16 Open forum: Q & A
Deutsche Börse Group 1
Goal§ With T2S, the ECB strives to harmonise processes and reduce costs for cross-
border settlement. T2S will be the pan-European central platform for settling securities against central bank money (EUR).
§ The Clearstream CSDs will migrate to T2S as of February 2017 to deliver more efficient, better-valued and more harmonised services.
Current status / next steps§ Activities in line with plan / software development completed and rolled out for production§ Status on customer readiness and migration tests§ Migration test with other CSDs and ECB performed in April, July and September§ Customer simulation between July 2016 and February 2017
How to§ Implied changes to almost all processes and systems related to settlement§ Common cross-locational, cross-entity architecture FRA / LUX§ Close alignment with Eurex Clearing T2S activities and other Deutsche Börse
Group entities§ Ruling principles to apply to all measures§ Shield customers from laborious T2S impacts as much as possible§ Focus on risk mitigation for business migration
Please note:
§ T2S platform is live since July 2015
§ 23 CSDs signed up to T2S. All project activities are being coordinated between these two and the ECB.
§ Ten CSDs are live on T2S (incl. Italy, Portugal, NBB-Belgium, ESES).
§ CBF is the biggest CSD on T2S and will double the volume upon migration in February 2017.
T2S – TARGET2-Securities
Deutsche Börse Group 2Open Day 2016
T2S – common European settlement platform
1)Source: European Central Bank presentation „T2S: Settling without borders in Europe”, January 20122)ECOFIN – Economic and Financial Affairs Council
In April 2012, CBF signed the framework agreement
T2S benefits§ Reduce cross-border settlement fees
§ Real-time gross settlement (with direct connection to cash accounts at NCBs)
§ Increased liquidity and stability
T2S challenges§ Significant investments will be required
to make the necessary adaptions
§ Redefinition of operating strategy and business model required
§ Participation of a large numberof involved parties outof different markets
About T2S1)
§ ECOFIN2) asked the Eurosystem not to limit T2S to the euro area.
§ The legal set-up of T2S gives guarantees to CSDs and non-euro area NCBs having their accounts in T2S.
§ T2S and harmonisation go hand in hand; greater benefits if practices are harmonised across the whole of Europe
T2S CSD§ In total, 23 CSDs will
participate in T2S,including almost all CSDsin the euro area as well as fourCSDs based outside the euro area.
§ Clearstream will be the largestparticipant and will account for nearly 40% of all T2S volume in the euro zone
Open Day 2016 Deutsche Börse Group 3
Status on ECB T2S project – milestones
§ T2S wave 3:
CSDs (incl. ESES) migrated to T2S platform on 12 September 2016.
§ T2S wave 4:
§ CBF entered in the community testing stage on 11 July 2016.
§ Further migration weekend dress rehearsal took place on 1–2 October 2016.
Deutsche Börse Group 4
Wave 3 – live, wave 4 – migration preparation
Legend: SP Milestone
2016 2017Q2 Q3 Q4 Q1 Q2 Q3 Q4
SP11.3 – 1 Aug 2016Start business day testing
SP12.3 – 26 Aug 2016End of user testing executionphase
SP10.4– 11 June 2016
Start community testing
SP14.4 – 22 Sep 2016Ready to connect for production
SP15.4 – 3 Nov 2016 Ready to load SD
SP11.4 – 27 Dec 2016Start businessday testing
SP16.4 – 3 Feb 2017Ready to go-live
SP12.4 – 20 Jan 2017End of User Testing
SP10.5 – 13 Mar 2017Start Community Testing
SP10.5 – 28 Aug 2017End of user testing
Synch.points
Programme phases
User testing
Migration12 Sep 2016
(wave 3)6 Feb 2017
(wave 4)
today
18 Sep 2017(final wave)
SP11.5 – 26 Sep 2017Start multilateral interoperability testing
Open Day 2016
External test phasesMultilateral test W4Community test / BD1) W4Migration test W4Migration weekend dressrehearsals
Go-live
Roadmap
Deutsche Börse Group 5
1) W4 BD – Wave 4 ECB Business Day Test2) MWDR – Migration Weekend Dress Rehearsal
INRPreparation W 4Operations related test
Q1
2017
Service readinessJoint test (LUX / FFM) / BATT2S release, bug fixes testCross-border test W4Migration test W4
2016Q2 Q4Q3Q1
6 Feb 2017:Go-live
CBF & LuxCSD
Exte
rnal
We are here
SW-development
External readinessSimulation CBF
ReleasesCBF R. 16.4 (May)CBF R. 16.6 (Sep)CBF R. 16.7 (Nov)CBL R. 16.3 (Jul)CBL R. 16.3.1 (Sep)CBL R. 16.4 (Oct)CBL R. 16.5 (Nov)
Inte
rnal
Cross-border test wave 4
Slice 5
Migration test wave 4
Wave 4
Wave 4
31 Mar 2016: delivery of slice 6
W4 community test W4 BD
2 May 2016: launch CBF 16.412 Sep 2016: launch CBF 16.6
02.07.2016: launch CBL 16.312.09.2016: launch CBL 16.3.1
7–10 July 2016:MWDR w.cust
30 Sep–2 Oct 2016:MWDR w/o cust
Multilateral interoperability test
Wave 4 migration test
15–17 Apr 2016:MWDR2) w/o cust
Slice 6
28 Mar 2016:T2S W2
12 Sep 2016:T2S W3
6 Feb 2017:T2S W4
30 Sep 2016: delivery of slice 7(variation orders)
Slice 7
16–18 Dec 2016:MWDR w.cust
20–22 May 2016:MWDR w/o cust
21 Nov 2016: launch CBF 16.7
Wave 3
18 Sep 2017launch T2S final wave
BATslice 1–6
FinalBATslice 7
27 Aug 2016: Rel 1.1.5
7 Mar 2016: Rel 1.1 26 Nov 2016: Rel 1.2
3 Nov 2016:start W4 Pre-Mig
TD finalregr.test
Bil. testw/o custI/O env
Mul. testw/o custI/O env
Mul. testw. custI/O env
21 Nov 2016: launch CBL 16.515.10.2016: launch CBL 16.4
Q2 Q3
Open Day 2016
Customer involvement and information
Deutsche Börse Group 6
Deutsche Börse AG has been actively involving customers since 2011 to ensure community readiness for T2S
T2S customer business events § Bilateral meetings§ Webinars§ Workshops and roadshows§ User advisory board§ DUG / IIG§ Effektenrunde§ Eurex Clearing committees
T2S information board§ Clearstream T2S bulletin§ Clearstream T2S web portal§ Clearstream T2S distribution list§ Eurex Clearing focus groups§ Eurex Clearing roadshow§ Eurex Clearing newsflash
T2S customer task force§ Ensures awareness and identifies the
customer’s impact § Aligns adaptation requirements
between Deutsche Börse AG and its customers for the implementation of T2S
SPOC concept§ The Eurex Clearing and
Clearstream single points of contact (SPOC) on customer side are the basis for close collaboration within the implementation phase.
§ Coordinate the communication of Clearstream and Eurex Clearing T2S-related activities
Open Day 2016
Deutsche Börse customer
T2S wave 4 – customer simulation
Deutsche Börse Group 7
ECB’s overall schedule and Customer Simulation (ICP and DCP)
Wave 4
2016
Wave 3: launch12 Sep 2016
Community test Business day test
Stabili-sation
July Aug Sep Oct Nov Dec Jan Feb
DCP authorisation testing1)DCP certification festing
ECB
CBF
Clean-up6–13 July 2016: MWDR #1 15–21 Dec 2016 MWDR #3
Wave 4: launch6 Feb 2017
CBF free simulationduring T2S community test25 July – 11 Nov 2016
2017
Extended CBF free simulationperiods23 Jan – 24 Feb 2017
Preparation for MWDR #3
CBF free simulationduring T2Sbusiness day test2–20 Jan 2017
Clean-up
Preparation for MWDR #1
Please note:
§ All indicated dates may be subject to changes due to interruptions caused by activities, e.g. release deployments
§ The latest plan covers the MWDR #2 timeline
§ MWDR #3 in December 2016 and subsequent customer free simulation will be performed on the T2S pre-production environment (PPE)
§ This might require additional set-up activities by DCPs
§ It is currently in clarification whether the pre-production environment will be connected to T2CUST
Preparation for MWDR #22)
1–2 Oct 2016 MWDR #2
today
1) For CBF no dedicated authorisation applies as the coverage will be achieved by the simulation.2) MWDR #2 will be conducted in a different environment.
Open Day 2016
T2S wave 4 – customer simulation
Deutsche Börse Group 8
Eurex Clearing schedule
2016July Aug Sep Oct Nov Dec Jan Feb
2017
ECAG
Clean-up7–10 July 2016: MWDR #1 15–21 Dec 2016 MWDR #3
Preparation for MWDR #3
CCP member simulation
Preparation for MWDR #1
ECAG T2Smember simulation
Preparation for ECAG migration test
ECAG migration test1–2 Oct 2016
ECAG T2S member simulation
CCP member simulation
Business day testing
Wave 3: launch12 Sep 2016
Wave 4: launch6 Feb 2017
CCP membersimulation
CCP membersimulation
Bilateral testing
Open Day 2016
T2S wave 4 – CBF customer simulation
Deutsche Börse Group 9
Update: CBF services are supported to a higher degree than in standard CBF simulation tests
Please note:
§ All productive channels are available for simulation
§ U2ACASCADE Host, CASCADE PC (new version distributed on 8 July 2016)
§ A2AFT, SWIFT, MQ
§ T2S daily schedule for community test and business day test is available in the “Simulation Guide –Detailed Version“
1) No custody for cross-border will be offered.2) OeKB, Monte Titoli, ESES and SIS.3) Depending on account set-up at NCB and CBF4) Depending on customer feedback in simulation questionnaire, EDT will not be offered5) Depending on bilateral agreement
§ FoP§ DvP against EUR (via DCA)§ DvP against other currencies (via
simulator)§ Cross-border settlement1) with selected
In-CSDs2)
§ Settlement1) with CBL via simulator for CBF account master 7201
§ CASCADE RS§ T2S auto-collateralisation3)
§ CCP on ECAG batch days§ LION on ECAG batch days§ Bond stripping§ Warrant detachment / warrant
re-attachment
§ Corporate actions§ BUND interest payment and
redemption§ Dividend payment with record day
processing§ Bonus share§ Pari Passu
§ TEFRA D§ New issues4): new admission, mark-up,
mark-down, withdrawal (only for lead manager)
§ GC pooling§ Cross-border settlement1) with Out-CSDs§ Out-CSD SIX SIS5)
§ Out CSD DTCC via simulator
Focus daysFree simulation
Open Day 2016
Customer readiness status
Deutsche Börse Group 10
Customer simulation status
Customer simulation environment (IMS23)
Permanent task to be supported and conducted by CBF.
§ IMS23 was made available in time on 25 July 2016
§ The system runs stable
§ If required maintenance / release days are communicated to participants in appropriate time
§ Customer settings1) are updated on demand. All orders are captured and being processed in close alignment with the customer.
Customer participation
No major issues have been reported so far.
CBF Focus Days
Additional test cases can be added for customer simulation.
§ 142 CBF customers registered for participation. This represents a market coverage of 98%
§ Nearly all customers started with the test execution
§ In total 283.398 instructions2) have been transmitted / entered in IMS23 from the start until 18 September 2016
§ CBF noticed an average of 14 calls and 55 new mails per simulation day.
§ Test execution for various business cases was conducted according to plan
§ TEFRA-D§ New Issues§ Bund Payment§ Dividend§ Non Income events
§ Cross-border settlement with OeKB and DTCC was supported. Test execution with Monte Titoli and ESES has been agreed.
Please note:
§ Setup issues in all three areas have been notified and meanwhile resolved
§ In case a configuration item is detected within the different test environments (IMS23, T2S MIG2, T2Cust) resolving or mitigating actions will be setup immediately
1) Areas are Securities Accounts, Dedicated Cash Accounts, Connectivity for customers acting in ICP and DCP mode2) Number covers all instructions entered by CBF for setup activities and the preparation of Focus Days
Open Day 2016
Customer readiness status
Deutsche Börse Group 11
Customer simulation progress reporting 1 Aug – 18 Sep 2016
Open Day 2016
0
10000
20000
30000
40000
50000
60000
70000
Entered Transmitted Instructions
§ In average 88% customers actively participate in customer simulation on a daily basis
§ Settlement instructions in all available instruction types can be entered successfully
T2S wave 4 customer readiness
Deutsche Börse Group 12
Important deadlines in 2016Deadline Scope Set-up Impact / risk,
if deadline is missedECB
milestones T2S wave 4
CBF preparative
15 Oct 2016
Provision of static data for new accounts1) ofexisting CBF customers to be included in wave 4 production from start4)
Production(mandatory)
Accounts1) may not be migrated into T2S.
Accounts may not be operational after 5 Feb 2017.
3 months beforelaunch Wave 4:start pre-migration phase
Freeze2): with the start of the pre-migration phase, the entire CBF customer account structure needs to be stable and ready to be transferred. Additional changes will increase the risk that the migration of the resp. account / holding fails.
30 Mar2016
Provision of static data for allaccounts1) of new and existing CBF customers to be included in wave 4 community testing
Customersimulation, production(mandatory for DCPs, strongly recommended for ICPs3))
Accounts may not participate in community MWDR on 9–10 July 2016 with customer participation and CBF customer simulation (within ECB community and business day) from the beginning.
DCP accounts may not be ready to take part in DCP connectivity testing
9–10 July 2016:MWDR with customer participation (optional for ICPs)
§ Portfolio transfers and accountrestructurings to be finalised to ensure the testing of the pre-migration phase can be verified
§ New (master and sub) accounts to be opened prior to set-up phase for wave 4 community testing
§ Prospects aiming for ICP connectivity to finalise their account opening procedures
§ Customer account set-ups in DCP mode (starting T2S wave 4) to be finalised
1) “Accounts“ pertains to account master(s), sub-accounts, connectivity, access rights, PoAs.2) Freeze will be lifted at the end of the official T2S stabilisation period (currently 4 weeks after wave 4 launch).3) CBF will be testing on the basis of customers´ close-to-production data for the first time.4) This is limited to standardised account set-ups (more complex set ups already earlier).
Open Day 2016
Customer readiness status
Deutsche Börse Group 13
Majority of customers defined their future T2S static data set-up1)
1) Status as of 23 September 2016
Open Day 2016
Connectivity
DCP customers
T2S party BIC
Static data
486
0
100
200
300
400
500
600
T2S StaticData (DCA)Form missing
T2S StaticData (DCA)Formreceived
535
0
100
200
300
400
500
T2S Party BICactivated
271
0
50
100
150
200
250
300
Connectivitysettings tobe modified
T2S-compliantconnectivitySetupachieved
14
0
2
4
6
8
10
12
14
16
All T2S Party BICs have been successfully introduced in CBF production environment
Without a T2S compliant connectivity setup instructions cannot be sent / migrated to T2S; neither for the simulation nor for the production
For CBF accounts without associated Dedicated Cash Account (DCA), no DvP processing on the T2S platform is possible neither in simulation nor in production
§ All DCP setup forms have been received and introduced inT2S MIG2
§ 8 DCPs achieved certification at Eurosystem
3
2
T2S migration weekend – wave 4
Deutsche Börse Group 14
Customer reporting on migration weekend
1) After this activity, Clearstream is nearly complete in standard T2S processing mode.
Regular outbound
Cut-off for migration close queuesfrom customers
Open queuesfrom customers1)
Cut-off for settlement day Friday
ICP customerinput blocked
Point of no return (PONR)
Finalisation of settlement day Friday 1
Back-up for potential fall-back(after cut-off for migration)2
Position set-up via FoPs to T2S§ Transfer of instructions § Settlement§ Reconciliation
4
Migration of pending instructions to T2S5
T2S NTS Cycle 16
Send new instructions to T2S7
T2S NTS cycle 28
3 Cancellation processing by CSD
T2S RTS processing9
Customer connectivity inbound
Report “Loeschung wegen Migration T2S“ intended to be sent on Saturday at approx. 1.00 a.m.
Print-formatted reports related to settlement day Friday (currently 6.00 p.m. following day)
Report “Loeschung wegenfehlgeschlagener Migration T2S“ intended to be sent on Saturday close to 11.00 p.m.
MT548 cancellation notifications “CANS“
Print-formatted reports related to settlement day Monday
Customer connectivity outbound – migration reporting
Start of T2S business day Tuesday: Monday 6.45 p.m.
Block outbound traffic to ICP customers
Open queues and regular outbound
Open Day 2016
Additional (back-up) material
October 2016
Leading market position: T2S enables Clearstream to benefit from volume consolidation among participating markets
Pre-T2S
1) Outcome of Oliver Wayman’s study “The T2S Opportunity-Unlocking the hidden benefits of TARGET2-Securities”2) Average charged by agent banks and ICSDs3) Average cost calculated by ECB
Post-T2S migration
TARGET2-Securities (T2S) is a central technical platform for securities settlement in euro and foreign currency in central bank money that will replace existing models and redesign the post-trade landscape.
Savings of €30 to €70 million: organisation of collateral management and other benefits of using T2S systems depending on the type and size of financial institutions1):§ Lower cross-border settlement costs (today: €2–52), with T2S: €0.253))
§ Cash and securities pooling: central funding account and safekeeping of assets enables settlement netting, reduces funding and eliminates friction cost associated with todays fragmented pools.
§ Central collateral management and auto-collateralisation will create financing efficiencies and drastically reduce securities realignments and collateral consumption and thus support settlement credit.
§ National central banks will provide intraday settlement credit facilities for free while commercial banks are expected to start charging; cash deposits at national central banks attract no regulatory charge.
Deutsche Börse Group 16Open Day 2016
T2S wave 4 – CBF customer simulation
Deutsche Börse Group 17
Recap: high-level simulation calendar – remains unchanged
Please note:
§ IMS23 will be available even after migration on 6 February 2017 during stabilisation period for approx. three weeks.
§ The customer simulation calendar is available in the “Simulation Guide –Detailed Version“.
§ 19 August: snapshot of dynamic data (instructions, positions) from CBF production as basis for MWDR
§ 28/29 September: customer instruction entry§ 30 September (evening) – 2 October (afternoon): migration weekend§ 3–5 October: initial testing is based on production-like data and volumes§ 06/07 October: clean-up period
§ 25 July – 11 November: the community testing will be conducted as CBF free simulation. Focus days over the timeline of the community testing.
§ 14 November – 14 December: pre-migration, IMS23 closed§ 15/16 December: customer instruction entry§ 17/18 December: migration weekend§ 19–21 December: T2S BAU days§ 22–26 December: clean-up period
§ 2–20 January: business day test based on same set of positions as used for start of community testing on 25 July but with new snapshot for static data (snapshot date to be confirmed)
§ 23 January – 3 February: contingency buffer for simulation§ 04/05 February 2017: migration weekend, 06 February 2017: launch§ 6–24 February 2017: stabilisation period, simulation environment open with community
testing schedule (no focus days)
MWDR on 1/2 October
Community test
CBF free simulation
MWDR on 17/18
December
Business day test
CBF free simulation
Open Day 2016
T2S migration weekend – wave 4
Deutsche Börse Group 18
Pending instructions: activities before PoNR (1/2)
During migration weekend
1
§ Customer reporting1)
“List of instructions subject to automated cancellation process with start of migration weekend”§ Automated cancellation
§ Migration§ Reconciliation§ Repair / adjustments§ Customer reporting1)
“List of instructions cancelled as their migration was not successful”
Friday, 3 Feb 2017 Saturday, 4 Feb 2017
18h 19h 20h 21h 22h 23h 00h 01h 02h 03h 04h 05h 06h 07h 08h 09h 10h 11h 12h 13h 14h 15h 16h 17h 18h 19h 20h 21h 22h 23h 00h
Fina
l pos
ition
CB
F
EC
B d
ata
Sav
ing
Tech
nica
l lau
nch
Poi
nt o
f no
retu
rnT2S FoP settlement
T2S firstNTS cycle
Migration of pending instructions
2
Instructioncancellation
Position set-up part 1
Position set-up main packages (FoP) Reconciliation of positions
New instructions out of KADI
Reconciliation instructions Settlementefficiency
EC
B d
ata
savi
ng
Legend:Measures and actions to be taken by CBF1) Reports will be provided via CMA-Spool after point of no return; impact on other (BAU) reports / messages currently assessed
Open Day 2016
T2S migration weekend – wave 4
Deutsche Börse Group 19
Pending instructions: activities before PoNR (2/2)
ICP procedures
During Migration Weekend
3
à Processing of queued instructions from customers acting in ICP mode
§ Unlock DCP users§ Information to customers acting in DCP mode
that T2S is ready to process their instructions§ Re-instruction by DCP customers
Poi
nt o
f no
retu
rn
T2S last NTS cycle
DCP procedure4
New instructions incl . CCP Reconciliation cycle 2
RTS
Sunday, 4 Feb 2017
00h 01h 02h 03h 04h 05h 06h 07h 08h 09h 10h 11h
Responses NTS-1 / recon
Maintenance T2S / CBF
Legend:Activities to be conducted with / by customersMeasures and actions to be taken by CBF
Open Day 2016
Thank you for your attention.