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T2S: from vision to reality
SWIFT Business Forum
Madrid, 5 March 2013
Jean-Michel Godeffroy
Chairman of the T2S Board
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3
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Purpose and benefits of T2S 1
Functioning of T2S
Project status and challenges ahead
Spanish market 4
Table of contents
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Scope of T2S 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
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Future EU Settlement Landscape Purpose and Benefits of T2S
One integrated settlement process
(domestic and cross-border)
CSD
CSD
CSD
CSD
Market Participant M
arke
t Par
tici
pan
t
Market Participant
Marke
t Particip
ant
Cust
odia
n
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Same processing and reduced settlement fees for domestic
and cross-border transactions
Possibility to access all securities from one account in one
CSD: T2S makes links between CSDs easier
Potential to optimise collateral and liquidity requirements
Reduced back-office costs by centralising settlement and thus
streamlining interfaces
New business opportunities through access to new markets
Impact of T2S
Benefits for Users
Higher level of competition in post-trade industry
A Single Market for financial services in Europe through
harmonised clearing and settlement
Reduced settlement risks on cross-border transactions to
positively 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
Impact of T2S
Benefits for Markets
Table of contents
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2
Purpose and benefits of T2S 1
Functioning of T2S
Project status and challenges ahead
Spanish market 4
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Indirect vs Direct Connection Functioning of T2S
CSD
Client
Client
CSD
Client
Direct
Connectivity
Indirect
Connectivity
Indirect
Connectivity
CSD participants can connect directly to T2S…
…but their CSD determines their access rights
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Table of contents
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2
Purpose and benefits of T2S 1
Functioning of T2S
Project status and challenges ahead
Spanish market 4
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T2S Community
22 CSDs have confirmed their
participation, representing
nearly 100% of settlement
volume in euro
Other CSDs may join later but
will have to pay an entry fee
So far only the euro and DKK
(as of 2018) will be settled in
T2S, but other currencies
may join later
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ECB Governing
Council
T2S
Board
Governors’
Forum
Non-euro
Currencies
Steering Group
(NECSG)
CSD Steering
Group (CSG)
Spanish National User
Group (NUG)
Non-euro
central banks’
governors / boards
Project Managers
Group (PMG)
Operations
Managers Group
(OMG)
Change Review
Group (CRG)
ECB
Centr
al B
ank
Deci
sion-M
akin
g
Bo
die
s
Steeri
ng
Leve
l
Bo
die
s
Mar
ket
advi
sory
bodie
s
Tech
nic
al G
roups
Reporting
Escalation
CRG reporting to CSG
Technical Groups reporting to T2S Board
Advisory Group
(AG)
T2S governance since 1 July 2012
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We are here
T2S Go-Live
Start Mon
17/07/06
Finish Tue 25/04/17
Migration Phase (SP14 - 16)
User Testing Phase (SP7-12)
EAT Development & Testing Phase
Specification Phase
Preparation Phase
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
SP1 SP2 SP3 SP4
SP5 SP6
SP13 SP17
T2S Programme Status
99% of software developed for core functions
Focus is now on testing
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 selected
What T2S has delivered so far
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Three T2S network providers
to maintain competition:
2 value-added and
1 dedicated-line;
Eurosystem licensing
procedures led to selection of
SIA/Colt and SWIFT as value-
added network providers.
The Proof-of-Concept phase
was successfully completed
before the deadline;
GovC decided Eurosystem’s
CoreNet to be the dedicated-
line provider.
User Connectivity
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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 monitor
progress 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)
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Main challenge
Timely preparation of all stakeholders
Euroclear ESES (BE, FR, NL)
Interbolsa
NBB – SSS
Clearstream Banking
Keler Hungary
LuxCSD
OeKB
VP Lux
VP Securities
9 months Wave 2
28/03/2016
Wave 3
12/09/2016
Wave 1
22/06/2015 6 months 5 months
BOGS
Depozitarul Central
Malta Stock Exchange
Monte Titoli
SIX SIS Ltd
Migration waves
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AS Eesti Väärtpaberikeskus
CDCP Slovakia
Euroclear FI
Iberclear
KDD Slovenia
CSD of Lithuania
Wave 4
6/02/2017
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CSD
Regulation T2S
A wide frame is needed…
…Harmonisation
operational
dimension
legal / regulatory
dimension
Market integration
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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 they
trade, clear and settle their trades
Adoption of CSD Regulation necessary as technical standards
need to be developed by end 2013/early 2014
Many technical and market practice barriers tackled by T2S
EU Regulations
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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
T2S is a unique opportunity to remove Giovannini
barriers by harmonising EU post-trading
Harmonisation in T2S
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T2S
DVP will no longer be a
bilateral relationship
between one CSD and one
NCB.
Any CSD in T2S is
potentially in a DVP
relationship with any NCB
in T2S
Harmonisation
Same market practice all
over Europe: national
boundaries will be
broken down
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The new framework will lead to increased competition
CSDs regulation
Same safety and
efficiency rules all over
Europe
Competition
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Table of contents
3
2
Purpose and benefits of T2S 1
Functioning of T2S
Project status and challenges ahead
Spanish market 4
T2S Market Compliance monitoring
Status 28/02/2013
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Priority 1 Priority 2
T2S Markets 1
T2S messages
ISO 20022
2
T2S messages
Matching fields
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Schedule of
settlement day
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T2S CA
standards
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T2S Settlement
finality II
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T2S Settlement
finality III
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Availability of
omnibus
accounts
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Restrictions on
omnibus
accounts
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CA market
standards
(CAJWG)
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Securities
amount data
X G G G R B B B B G B
Y G G G G B G B B G B
Z G G Y Y G G B B R - No info B
XX G G G Y Y G B B Y B
YX G R Y R G G B B G B
ZX G R Y R B Y B B G B
XY G G G R B G B B Y B
ES G G G Y B B B B G B
YY G R Y R B B B Y Y Y
ZY G G G G B G B B Y B
XZ G G Y Y B G B B R – No info B
YZ G G Y R Y Y B B R – No info B
ZZ G Y G G B G B B G B
XXX G G G R Y Y B B R – No info B
YXX G R Y Y G G B B R – No info B
ZXX G R Y Y B Y B B R – No info B
XXY Y Y Y R Y G B B R - No info B
YXY G G G G B G B B G B
ZXY G G G G G G B Y G G
XXZ G G R Y B G B B R B
YXZ G G G Y G G B B R B
ZXZ G G G R Y Y B Y R - No info Y
Summary
28/02/2013
Green: 21
Yellow: 1
Red: 0
Green:15
Yellow:2
Red: 5
Green: 12
Yellow: 9
Red: 1
Green: 5
Yellow: 8
Red: 9
Blue: 12
Green: 5
Yellow: 5
Blue: 3
Green: 14
Yellow: 5
Blue: 22
Yellow: 0
Red: 0
Blue: 19
Yellow:3
Red: 0
Green:8
Yellow:4
Red:10
Blue: 19
Green: 1
Yellow:2
Summary
25/01/2013
Green: 21
Yellow: 1
Red: 0
Green:15
Yellow:2
Red: 5
Green: 11
Yellow: 8
Red: 3
Green: 4
Yellow: 7
Red: 11
Blue: 12
Green: 3
Yellow: 7
Blue: 3
Green: 11
Yellow: 8
Blue: 22
Yellow: 0
Red: 0
Blue: 19
Yellow:3
Red: 0
Green:8
Yellow:4
Red:10
Blue: 19
Green: 1
Yellow:2
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T2S has been one of the key factors of the post-trade reform in
Spain: the reform facilitates the ability of Iberclear to compete in
a T2S context
Iberclear is one of the Eurosystem’s contracting partners to
offer T2S services to its clients
Iberclear has key responsibility to ensure the readiness of the
Spanish market for T2S and explain the expected adaptation
process. BUT dependent on adequate pace of regulatory reform
Preparations of the Spanish market
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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 all
CSDs in Europe are renewing their settlement system at the
same time.
Links? What access to securities held in other CSDs will
Iberclear provide?
What will change for Spanish market participants?
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T2S on the web: www.t2s.eu - Publication of all relevant
information and key documents
- Access to documents of all T2S
working groups
- ‘Spotlight‘ on latest information on
the project
- Insights on project plan, governance,
pricing, harmonisation
- Ad hoc sections dedicated to all
stakeholder categories (CSDs, banks,
NCBs, others)
- Publication of quarterly newsletter
‘T2S OnLine‘
More information on T2S
Thank you for your attention
www.t2s.eu
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