Markets are joining late and creases are yet to be completely ironed out, but the T2S platform could expand to new markets and further throughout Europe, according to panellists at the Global Custody Forum in London.
Dirk Bullmann, directorate for general payment systems and market infrastructure at the European Central Bank (ECB), addressed the delay to implementation for the Euroclear Settlement of Euronext-zone Securities (ESES) markets, laying out two possible options for the CSD’s future: either it will migrate with wave three in September 2016, or it will be moved to the ‘contingency wave’, trailing six months after wave four and going live in September 2017.
In addition, the initial roll-out plan was to have a major player going live with each wave. Euroclear would fulfil this criteria in wave two, while Clearstream would be the large player in wave three.
Guido Wille, executive vice president and head of market development at Clearstream, suggested that moving Euroclear to the contingency wave could ultimately create more costs for everybody, but he also saw issues for Clearstream if it goes live at either time.
While Wille stressed that Clearstream is already prepared to go live in wave three, he said that delays from Euroclear will have knock-on effects for Clearstream, meaning it will have to re-test systems and shorten the final testing periods “because we are stringent”, Wille said.
He added: “We shouldn't underestimate the interdependency when it comes to testing.”
Looking back on wave one implementation, however, Bullmann pointed out that with projects of this size the industry should “expect the unexpected”, adding that, in hindsight, more education could have helped smaller players to be properly prepared for the migration.
“Some players … still live in the pre-T2S world in terms of operational procedures,” he said, adding that, now and in the future, the ECB should make sure that the right information is passed to the right people in the right way.
Ahead of the wave two migration, Wille suggested that as Clearstream has moved on with the project, it has encountered unexpected issues that need to be addressed.
He said: “A lot of work that still has to be done. There will be more and more that we find to work on going forward.”
The CSD has worked to complete changes before their deadlines, or “before we were forced to do it”, Wille said. “We’ve changed the German market rules already to match the T2S standards.”
When asked what developments we can expect for T2S further in to the future, Wille pointed to the goal of a single large liquidity pool in one market, while Bullmann said the platform could be “of a benefit for other markets”.
Bullmann suggested that the platform could expand its reach both with regards to asset class and geographically, to Scandinavian markets or to the UK.
“T2S could be a magnet,” he said. “Outsiders have to see how to position themselves in this environment.”
