The first wave of Europe’s ambitious settlement platform, TARGET2 Securities (T2S), successful went live on Monday in Greece, Malta, Romania and Switzerland.
After eight years of planning, the €1 billion IT project, banks and brokers will see the first phase of integrating Europe’s capital markets and settlement houses with the European Central Bank (ECB).
“This is a tangible step forward for financial integration in Europe,” says Yves Mersch, ECB executive board member. “T2S will benefit people in 21 countries and will support the creation of a true single capital market in Europe.”
Managed by the ECB, T2S will effectively make it cheaper for firms to buy and sell shares in companies across national borders, and allow banks to settle transactions with just one central securities depository (CSD), as opposed to having accounts with multiple venues.
“By standardising settlement methodologies across Europe, the new and automated process is expected to greatly increase efficiency, while reducing capital requirements and operational risk for global asset managers,” says Kashyap Kapasi, director of strategic solutions for Investment Services, Fiserv.
Italy, the largest euro market in wave 1, was supposed to go live on Monday but has delayed its launch date to August 31 due to technical problems.
T2S is set to become a major growth project for Deutsche Bank, which hopes to leverage its network coverage to facilitate access for some of the largest custodians, including Northern Trust and RBC Investor & Treasury Services (RBC I&TS).
“The smooth transfer of assets within T2S improves the flow of liquidity and the use of collateral, thus easing pressure in terms of capital requirements. We aim to leverage these advantages in the best interest of our clients,” says Satvinder Singh, head of Institutional Cash and Securities Services, GTB, Deutsche Bank.