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T2S: Planning – Pricing - Harmonisation - nbb.be 1. t2s for nbb_sss.pdf · PDF fileT2S: Planning – Pricing - Harmonisation . ... Ti. ARGET and TARGET2) Purpose and Benefits of

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    T2S: Planning Pricing - Harmonisation

    NBB-SSS, 23 April 2012

    Annemieke Bax - T2S Programme Office European Central Bank

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    T2S Introduction Purpose and Benefits of T2S

    A Service offered to CSDs for Settlement only

    Notary Function

    Custody and asset-servicing

    Function Banking

    Function*

    Settlement Function

    Notary Function

    Custody/ asset-servicing

    Function Banking Function

    Settlement Function

    Registration of issuer indebtedness and investor

    holdings

    e.g. coupon payments, redemptions, stock

    splits

    Change of ownership among investors

    e.g. lending and borrowing only in some

    (I)CSDs

  • 2

    T2S Introduction

    Settlement in central bank money

    Commitment to EU-integrated and efficient financial markets

    Neutrality as a supranational organisation

    No economic interest, due to cost recovery principle

    Facilitator to balance different requirements

    Experiences in successfully establishing EU-wide infrastructures (i.e. TARGET and TARGET2)

    Purpose and Benefits of T2S

  • 3

    Table of Contents

    Harmonisation 3

    Pricing 2

    Planning 1

    T2S: Planning Pricing - Harmonisation

  • 4

    2012 2013 2014 2015 2016 2017

    SP16-T2S Go-Live

    User Testing Phase

    Phased Go-Live

    Planning Overview of T2S Timeline

    EAT

    CSD/CB

    Feasibility Assessment

    Development Phase

    CSD/CB proposal for migration waves

    Agreement on migration waves

    SP2-Feasibility Confirmation

    by CSD/CB

    SP3-T2S Programme Plan

    Comprehensiveness

    SP8-Start Bilateral

    Interoperability Testing

    SP5-Start of Eurosystem Acceptance

    Test

  • 5

    2015 2016 2017

    1ST Wave

    pre-migration activities

    and migration

    Pre-migration activities and migration of remaining waves

    T2S Go-Live of contingency wave

    Planning Migration Phase

    SP16-T2S Go-Live of 1ST wave

  • 6

    Table of Contents

    Harmonisation 3

    Pricing 2

    Planning 1

    T2S: Planning Pricing - Harmonisation

  • 7

    Pricing

    Tariff Structure

    Investment cost

    Running costs

    Prices

    PLUS TIMES

    Volume estimates

    Financial Equilibrium in T2S

    http://www.clker.com/clipart-24321.html

  • 8

    Pricing T2S Pricing Policy

    DVP price fixed at 15 cent per instruction until the end of 2018 A financial incentive package offered to CSDs that sign the

    Framework Agreement with the Eurosystem early Commitment to not increase fees by more than 10% per year

    from 2019 until the end of the cost recovery period Conditions of T2S pricing policy;

    - Non-euro currencies add at least 20% to total settlement volumes - EU settlement volumes are not more than 10% lower than those

    projected by market participants and the T2S Programme Board

  • 9

    Pricing

    Price Items Price Explanation

    Settlement Services * Two instructions per transaction will be charged

    Delivery versus payment 15 cents per instruction*

    Free of payment 9 cents per instruction*

    Payment free of delivery 9 cents per instruction*

    Internal T2S liquidity transfer 9 cents per transfer

    Account allocation 3 cents per instruction*

    Matching 3 cents per instruction*

    Intra-position movement 6 cents per transaction

    Intra-balance movement 6 cents per transaction

    Auto-collateralisation service with payment bank

    15 cents for issue and return, charged to collateral provider

    Intended settlement day failed transaction 15 cents surcharge per business day failed per instruction*

    Daytime settlement process 3 cents surcharge per instruction*

    Price List

  • 10

    Pricing

    Price Items Price Explanation

    Settlement Services (cont.) * Two instructions per transaction will be charged

    **Daytime congestion charge, from 2 - 4 p.m. 0 cents additional surcharge per instruction*

    **Auto-collateralisation service with NCB 0 cents for issue and return, charged to the collateral provider

    **Instruction marked with top or high priority 0 cents surcharge per instruction*

    **Cancellation 0 cents per instruction*

    **Settlement modification 0 cents per instruction*

    Information Services

    A2A queries and reports 25% of annual

    revenue

    per business item in any report or query generated

    U2A queries per executed search function

    Message subscription services per message

    Account Management Services

    **Securities account 0 cents Fee options: a) monthly fee per ISIN in the account or b) monthly fee per account

    **Fee per cash account 0 cents Monthly

    ** These items will initially be set at a zero price, presuming that actual usage will be within an expected consumption pattern. Reviews, however, occur at regular intervals to identify any stronger than expected usage and thus reconsider zero pricing.

    Price List (ii)

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    Pricing

    CSD

    Custody

    Others

    Reporting Lending

    Coll. Mgmt.

    T2S

    Settlement

    CSD Reshaping to T2S

    CSD infrastructures require adaptations to integrate with T2S

  • 12

    Pricing CSD Reshaping to T2S (ii)

    A set of functionalities for CSDs to individually design T2S interaction schemes according to business or legal needs

    Reshaping options; - Data replication: entirely or partially by real-time messages (push mode) - No data replication: outsourcing to use functionalities on request (pull

    mode) - A combination: some data are replicated and others are queried

    Data replication requires redundant storage of T2S data through quality and reconciliation controls

    Maximisation of future savings, in case of outsourcing to T2S

    Minimizing adaptation costs now leads to higher running costs in the future

  • 13 13

    costs

    time

    T2S with Reshaping

    PresentCost Level

    T2S without Reshaping

    today

    Pricing CSD Reshaping to T2S (iii)

  • 14

    Table of Contents

    Harmonisation 3

    Pricing 2

    Planning 1

    T2S: Planning Pricing - Harmonisation

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    Harmonisation in T2S

    T2S harmonises settlement and thus indirectly fosters further alignments of EU market practices

    Progress is defined in line with T2S stakeholders and other market initiatives

    The Eurosystem co-operates with market participants and public authorities to align the harmonisation process (e.g. CSD regulation, Joint Initiative on Market Infrastructures JIMI Steering Group)

    T2S is a unique opportunity to remove Giovannini barriers by harmonising EU post-trading

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    Harmonisation in T2S (ii)

    AG sub-structures deal with harmonisation issues - Corporate actions - Messages - Cross-CSD settlement (TFAX)

    In addition, enhancement of T2S role in harmonisation;

    - Harmonisation Steering Group to exclusively steer T2S alignments o Composed of Programme Board and AG senior members o Supported by the T2S Programme Office and NUGs o Reporting to the AG

    Status-quo of T2S

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    T2S Harmonisation List Activities status 27/03/2012

    ACTIVITIES - HIGH PRIORITY

    DEFIN

    ITION

    MO

    NITO

    R

    IMPLEM

    ENT

    1. T2S MESSAGES 1.1 T2S ISO 20022 messages G G x 1.2 T2S matching fields G G x 2. SCHEDULE OF SETTLEMENT DAY G G x

    3. CROSS-CSD SETTLEMENT TFAX Y x x

    4. T2S CORPORATE ACTIONS STANDARDS G G R

    5. LEGAL HARMONISATION

    5.1 Settlement finality I (moment of entry) Y x x 5.2 Settlement finality II (irrevocability of transfer order) G G Y 5.3 Settlement finality III (irrevocability of transfers) G G x 5.4 Location of securities accounts (Law applicable) Y x x 5.5 Outsourcing IT Y x x

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    T2S Harmonisation List Activities status 27/03/2012

    ACTIVITIES - HIGH PRIORITY

    DEFIN

    ITION

    MO

    NITO

    R

    IMPLEM

    ENT

    6. SETTLEMENT DISCIPLINE REGIME Y x x

    7. SETTLEMENT CYCLES Y x x

    8. OMNIBUS ACCOUNTS G G Y

    9. REGISTRATION PROCEDURES Y x x

  • 19

    T2S Harmonisation List Activities status 27/03/2012

    ACTIVITIES - LOW PRIORITY

    DEFIN

    ITION

    MO

    NITO

    R

    IMPLEM

    ENT

    10. CORPORATE ACTIONS MARKET STANDARDS CA market (CAJWG) standards G G R

    11. PLACE OF ISSUANCE Y x x

    12. TAX PROCEDURES 12.1 Withholding tax procedures G Y x 12.2 Transaction tax procedures G Y x 13. CROSS-BORDER SHAREHOLDER

    TRANSPARENCY Y x x

    14. INVESTMENT FUNDS SETTLEMENT R x x 15. MARKET ACCESS Y x x 16. CSD ANCILLARY SERVICES Y x x 17. SECURITIES AMOUNT DATA G G Y

  • 20

    T2S Harmonisation List Activities Colour Index

    Colour Description

    Green Harmonisation Activity/Deliverable is within the required scope and quality and is on time (NOTE: not necessarily completed) Green in implementation process indicates that the standard has either been implemented or that there is low risk of non-compliance prior to T2S launch.

    Yellow Harmonisation Activity/Deliverable will not have the required scope, will be/is delayed and/or not of the required quality if no corrective measures are taken. Yellow in implementation process indicates that th

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