The European Central Bank (ECB) has announced new dates for central securities depositories (CSDs) to join up to its ambitious TARGET2-Securities (T2S) initiative.
The ECB’s CSD Steering Group met on 10 December to discuss the outcome of the technical assessment of solutions for the delayed migration of Euroclear ESES CSDs to T2S. The ECB has now confirmed that Euroclear ESES CSDs can migrate on September 12, 2016, along with VP Lux and VP Securities.
Meanwhile, Clearstream, the Baltic CSDs, CDCP, KDD, KELER, LuxCSD and OeKB CSD will migrate on February 6, 2017. The final wave of CSDs, which will comprise of Iberclear and Euroclear Finland will migrate to T2S on September 18, 2017. NBB-SSS and Interbolsa will stay on course and migrate to T2S on March 28, 2016.
This new migration plan will be complemented by further mitigating actions that will aim to avoid further delay of any CSD, and to reduce the impact of such a delay to other CSDs. Discussions about this will take place in February 2016. A decision will also be taken on the new migration plan by the Governing Council in February 2016.
“The European Central Bank and the CSD groups have chosen a pragmatic approach, in the best interest of the market. Whilst a clear timeline is the foundation for a successful migration to T2S, it is fundamental for the stability of the markets that parties connecting to T2S are comfortable with their migration. Market safety must come first. Yesterday’s announcement, on which the ECB Governing Council will have to decide in February 2016, sends the right signal to the market. T2S is on track to bring the expected benefits to the region,” said a spokesperson from Deutsche Bank.
Euroclear announced in October 2015 that it was pushing back the date of moving its Belgian, French and Dutch CSDs to T2S, acknowledging it required more time for a safe and stable migration. The ESES CSDs originally intended to transfer their settlement services to T2S in March 2016. The involvement of Euroclear and Clearstream is crucial for the success of T2S.
While T2S went live in the middle of 2015, only a handful of CSDs including Switzerland’s SIX Securities Services and Italy’s Monte Titoli have joined. The T2S project has been subject to repeated delays. One attendee, speaking anonymously at the Global Custody Forum in London, said the project risked being compromised if the pace of change through disruptive technology continued at the same rate. The attendee cited the growing interest in Blockchain, the technology that underpins the Bitcoin cryptocurrency, as being a major threat to T2S as it could revolutionize clearing and settlement.