After much expectation, nine central securities depositories (CSDs) in Europe have signed the TARGET2-Securities (T2S) framework agreement.
In a meeting at the European Central Bank’s Frankfurt headquarters, the following CSDs signed the agreement: Bank of Greece Securities Settlement System – BOGS (Greece), Clearstream Banking (Germany), Depozitarul Central (Romania), Iberclear (Spain), LuxCSD (Luxembourg), Monte Titoli (Italy), National Bank of Belgium Securities Settlement System – NBB-SSS (Belgium), VP LUX (Luxembourg), VP Securities (Denmark).
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 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 CSDs that signed the contract account for around two-thirds of the settlement volumes in the euro area. Other CSDs are expected to sign in June 2012.
ECB president Mario Draghi described the impact T2S would have on Europe: “The fundamental objective of T2S is to contribute to making Europe a better place to invest, by fostering a single market in post-trade services. It will make financial markets safer and more efficient, and it will increase transparency in the post-trade environment.”
Peter Praet, the ECB executive board member responsible for the T2S programme, outlined how the project is expected to evolve following today’s commitment: “…after today, the spirit of the project will move from negotiation to cooperation. We will work together with CSDs to implement T2S – the good of European financial markets.”
The T2S project is now more than halfway to delivery, said the ECB, with a go-live date set for 2015. The much awaited project has been delayed twice.
Kevin Milne, director of post-trade services at the London Stock Exchange Group, Monte Titoli's parent, said the signing of the framework agreement is the culmination of Monte Titoli's long-standing involvement in the project which will help reduce participants risk and costs related to cross-border settlement.
Paolo Cittadini, CEO, Monte Titoli said: "The T2S project will bring improved market efficiencies and harmonised practices and processes to the European market, reducing costs for clients and the financial community across the region. Monte Titoli has been a firm supporter of the T2S project from the outset and we will continue to work closely with regulators and our customers to ensure a timely introduction in 2015, when the first wave will go live.
Reporting by Janet du Chenne, Global Custodian, an Asset International publication