Euroclear CSDs agree T2S deal

The Euroclear CSDs of Belgium, France and the Netherlands have agreed to sign up to the TARGET2-Securities framework agreement.

By None

The Euroclear CSDs of Belgium, France and the Netherlands have agreed to sign up to the TARGET2-Securities (T2S) framework agreement.

The project, launched by the Eurosystem to provide a common technical platform for securities settlement in Europe, is scheduled to start in 2015. The signing of the framework agreement is an important milestone in the T2S project. The agreement governs the legal relationship between the Eurosystem and each central securities depository (CSD) participating in T2S. In November 2011, after more than two years of negotiations, the contract was offered to 31 European CSDs, with an invitation to sign by April 2012 or, if additional time was required, by June 2012.

The signing of the three Euroclear CSDs follows an announcement in April by Clearstream that it will join T2S and the signing of nine other CSDs to the agreement in May.

Following consultation with the market and the regulators, Euroclear will finalise the assessment of CSD outsourcing arrangements with the relevant regulators before signing the T2S Framework Agreement. With support from parent company Euroclear, the boards of the three CSDs have agreed for each CSD to sign the agreement. As a result, Euroclear Belgium, Euroclear France and Euroclear Nederland will outsource settlement transaction processing to T2S. 

Clients of the three CSDs will continue to have accounts directly with the respective CSD and receive the full range of post-trade services from that CSD. The migration date and fees for connecting to and using T2S will be determined after completion of market consultation.

Joël Mérère, chairman of the boards of Euroclear Belgium, Euroclear France and Euroclear Nederland, stated: "The three Euroclear group central securities depositories are reflecting local market sentiment by taking the decision to sign the T2S Framework Agreement. As the first and only group of markets in continental Europe to have consolidated and harmonised transaction settlement and custody services on a shared platform, we appreciate the benefits of large-scale processing consolidation and harmonisation that T2S has the capacity to provide."

Valérie Urbain, CEO of Euroclear Belgium, Euroclear France and Euroclear Nederland, added: "Euroclear has been preparing to operate within a T2S environment for some time. Our asset servicing capabilities are expanding, and we are introducing collateral management services for clients in the Belgian, French and Dutch markets, as well as with some local central banks."

Known as the ESES (Euroclear Settlement of Euronextzone Securities) platform, the three CSDs settled €87 trillion of securities transactions in 2011, representing 31 million transactions, and held approximately €6 trillion of assets for clients.

The three ESES CSDs are part of the Euroclear group, which includes the international central securities depository Euroclear Bank, based in Brussels, as well as the national central securities depositories Euroclear Finland, Euroclear Sweden and Euroclear UK & Ireland. 

The Swedish market will not join T2S at this time, following market consultation and the decision of the Riksbank, the central bank, not to allow the settlement of transactions denominated in Swedish Krona in T2S.

Reporting by Janet du Chenne, Global Custodian, an Asset International publication