Interimreport1 January–31 March2024 Elo Mutual Pension Insurance Company
T2S: two months after launch
1. T2S: two months after launch
2nd Annual Post-trade Forum,
Vienna, 10 September 2015
Meike Ströter
European Central Bank
KatharinaTobiasch
Deutsche Bundesbank
8. What is TARGET2-Securities?
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Eurosystem product to provide harmonised and commoditised delivery-
versus-payment (DvP) settlement
• on a real-time basis
• in central bank money
• in euro (and other currencies)
Integrated model, but run by the central bank rather than by the CSD
Integration of cash and securities legs on one single IT platform
T2S is no (pan-European) CSD
• T2S will serve only as a provider of settlement services to CSDs
• CSDs continue to operate and provide their other services (custody, asset
servicing, taxes….)
• Contractual relationship only between T2S and CSDs
• Market participants still contract with the CSD(s)
9. TheT2S integrated model
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CSD A
CSD B
CSD C
T2S
SETTLEMENT
ENGINE
Securities
CeBM
Accounts
CSD A
T2S
SETTLEMENT INSTRUCTIONS
Accounts
CSD C
Accounts
CSD B
Accounts
Central Bank A
Central Bank
A
Central Bank
B
Central Bank
C
Accounts
Central Bank B
Accounts
Central Bank C
Accounts
Central Bank A
Accounts
Central Bank B
Accounts
Central Bank C
CeBM
CeBM
TARGET2
Non - € RTGS
CeBM = central bank money
10. A project for whole Europe – more than 20 CSDs participating!
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CSDs Eurozone
Austria
Belgium
Estonia
Finland
France
Germany
Greece*
Italy
Lithuania
Latvia
Luxembourg
Malta
Netherlands
Portugal
Slovenia
Slovakia
Spain
EU CSDs
Denmark
Hungary
Romania
Non-EU CSDs
Switzerland**
*Greece – government bonds
**Switzerland – euro business
12. Two months after its launch, the T2S platform has proven to be stable.
It experienced only few technical issues within the normal range of what we would expect,
which were resolved in due time. Since the very start of T2S live operations, the settlement
process has been very smooth.
Stability of the platform
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Bundesbank experiences from migration and operation
Bundesbank participated in the migration weekends of 22 June 2015 and
31 August 2015 in its roles as provider of central bank liquidity and
collateral manager.
• From Bundesbank point of view both migration weekends were a success
• The processes and interaction as jointly prepared by the migrating CSDs and
Central Banks and as previously tested proved to work
Since the go-live T2S – including its connection to TARGET2 – is running
smoothly.
• Neither Bundesbank and nor its customers faced any (major) (operational) issues
Key success factors
• Proper preparation and performance of testing
• Start of customer preparation early in advance (e.g. via specific information
sessions as well as bilateral support on individual basis)
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17. Part of the Eurosystem
Member of the 4CB (developing and operatingT2S)
Provider of central bank money
User of the settlement service (customer of Clearstream)
Plus :
Central banks’ financial stability task
Bundesbank’s roles in T2S
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Provision of central bank money in T2S
CSD A
CSD B
CSD C
T2S
SETTLEMENT
ENGINE
Securities
CeBM
Accounts
CSD A
T2S
SETTLEMENT INSTRUCTIONS
Accounts
CSD C
Accounts
CSD B
Accounts
Central Bank A
Central Bank
A
Central Bank
B
Central Bank
C
Accounts
Central Bank B
Accounts
Central Bank C
Accounts
Central Bank A
Accounts
Central Bank B
Accounts
Central Bank C
CeBM
CeBM
TARGET2
Non - € RTGS
CeBM = central bank money
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Bundesbank as provider of central bank money
T2S Dedicated Cash Accounts (DCAs) funded byTARGET2 accounts
Provision of intraday credit via auto-collateralisation
Facilitates the settlement of underlying securities-related instructions that
would fail due to lack of cash
Triggered automatically whenever the buyer has insufficient funds to settle
securities transactions
Intraday credit provision is collateralised with securities…
• …already held by the creditor (collateral-on-stock)
• …through collateral-on-flow (through the eligible securities that are being
purchased)
Automated substitution functionality
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Enhanced liquidity and collateral management
Focus of market participants has shifted from efficiency and savings in
cross-border settlement
Optimisation of liquidity management due to liquidity pooling and auto-
collateralisation
• Netting effects across all T2S markets
• Liquidity buffers in various national markets become redundant
• Auto-collateralisation across all T2S markets reduces liquidity needs
Less collateral needed
Optimisation of collateral management
• Efficient mobilisation of collateral cross-border
Right collateral at the right time at the right place
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Bundesbank‘s offer to Payment Banks
In order to allow its payment banks to benefit from the T2S opportunities,
Bundesbank offers its services to Payment Banks already since the go-live,
although Clearsteam will only migrate in Wave 3 (September 2016).
1. Opening of DCAs
• Liquidity pooling is possible since 22 June 2015.
• In wave 1 in total 10 DCAs have been opened in the books of Bundesbank by 9
Payment Banks.
2. Auto-collateralisation
• Provision via the „interim solution“ since 31 August 2015.
• In wave 1 3 Payment Banks use auto-collateralisation via Bundesbank.
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Relation to central banks’ financial stability task
CeBM = central bank money
T2S is a very critical system for the European financial industry
the functional design fosters financial stability
s
Settlement in risk
free central bank
money
(real-time/batch)
business continuity
concept
Shortened
settlement chains
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3 reasons
T2S community asks strongly for this: Harmonisation is the
added value of theT2S project.
Harmonisation supports the LeanT2S system specification.
Keeps budget and time under control
Part of the EU single market agenda (financial integration)
T2S harmonisation
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T2S Programme Plan:Where do we come from?
22 June 2015 –T2S started operations
Four CSDs of migration wave 1 started securities settlement inT2S together with their communities
On 31 August 2015 the Italian CSD MonteTitoli successfully migrated toT2S
In total 10 Central Banks provide liquidity for securities settlement inT2S
Three further migration waves will follow until February 2017
MAIN PHASES 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Preparation Phase
Specification Phase
Software Development &
Integration Testing
Eurosystem
Acceptance Testing
User Testing Phase
Phased Go-Live
Jul
2006
Jul
2008
Jul
2008
Sep
2012
Apr
2009
Sep
2014
Jan
2017
22 June
2015
Feb
2017
✰
Mar
2014
Mar
2014
Jun/Oct
2014
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31. wave1
•Bank of Greece
Securities Settlement
System (BOGS)
•Depozitarul Central
(Romania)
•Malta Stock Exchange
•SIX SIS (Switzerland)
wave2
•Euroclear Belgium
•Euroclear France
•Euroclear Nederland
•Interbolsa (Portugal)
•National Bank of
Belgium Securities
Settlement Systems
(NBB-SSS)
wave3
•Clearstream Banking
(Germany)
•KELER (Hungary)
•LuxCSD
(Luxembourg)
•Oesterreichische
Kontrollbank
(Austria)
•VP Lux
(Luxembourg)
•VP Securities
(Denmark)
wave4
•Centrálny depozitár
cenných papierov SR
(CDCP) (Slovakia)
•Eesti
Väärtpaberikeskus
(Estonia)
•Euroclear Finland
•Iberclear (Spain)
•KDD - Centralna
klirinško depotna
družba (Slovenia)
•Lietuvos centrinis
vertybinių popierių
depozitoriumas
(Lithuania)
•LCD - Latvijas
Centralais
depozitarijs (Latvia)
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T2S migration waves
• Monte Titoli (Italy)
31/08/2015
Next migration waves
T2S migration waves
Migration of Central Banks
• Central banks migrate their transaction business along with
their “home CSD”.
• But: cash accounts for settlement in T2S opened as of
wave 1 if needed by Payment Banks
• Auto-collateralisation as from migration of “home CSD” or
earlier via the „Interim Solution“
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33. Eurosystem ready
for user testing
1 Sept 2014
Ready to start
connectivity set-up
1 Aug 2014
Bilateral inter-
operability testing
1 Oct 2014
Multilateral inter-
operability testing
May 2015
Community testing
Sep 2015
Migration to T2S
28 Mar 2016
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Key milestones for wave 2 & 3
Multilateral inter-
operability testing
June 2015
Community testing
Feb 2016
Migration to T2S
12 Sep 2016
Common for
all waves
Wave 2
Wave 3
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Further challenge for Bundesbank: preparation of the migration of wave 3
• The majority of the German market will migrate to T2S together with the
German CSD Clearstream in September 2016
• Wave 3 participants are being prepared by the Bundesbank (as regards the
cash side) and by Clearstream (as regards the securities side) to ensure
their readiness for testing and migration
Bundesbank offers general information sessions, dedicated workshops and
individual support to its payment banks
Information on previous information sessions and further information (e.g.
registration, test cases) can be found under the following link:
https://www.bundesbank.de/Navigation/DE/Aufgaben/Unbarer_Zahlungsverkehr/TARGET2_Securities/target2_securi
ties.html
• In wave 3 Bundesbank also migrates toT2S in its role as CSD participant
The necessary adaptations of the internal systems and operational processes
are well on track
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