There is still much work to do to implement Target2-Securities (T2S) and achieve the harmonisation that everyone desires, according to a panel at the NeMa Conference in Dubrovnik.
Edwin de Pauw of Euroclear noted that the T2S roll-out is still at its beginning, despite the project going live in 2015. But he added: “When we get beyond the waves we can start to swim in the ocean of opportunities ahead of us.”
A live poll asked audience members to rate the importance of harmonisation to them, with almost half, 48 percent, calling it the project’s biggest benefit, while 33 percent said it is as important as T2S itself.
De Pauw warned that custodians should not ignore the benefits that harmonisation brings, and that it will also mean better interoperability between the markets. He added that there are still concerns around harmonising tax and registration processes, and that it will be a challenge to even define standards.
Graham Ray of Deutsche Bank agreed that there is still work to do, particularly in achieving harmonisation in the post-trade and asset servicing space, saying that this should be completed through leveraging the T2S network.
Regarding the future of the T2S network, the European Central Bank’s Dirk Bullman outlined the ‘Vision 2020’ strategy, including working to increase volumes on T2S, and ensuring that the infrastructure is in line with this and client needs.
Bullman also addressed the increasing hype around blockchain technology, but suggested that, although it could be helpful in some areas, it may be wiser to identify problems before considering the right technology to improve it, and that this is not always going to be blockchain. “When you have a hammer, everything looks like a nail,” he said.
Finally, de Pauw suggested that the industry should focus on achieving efficiency in cross-central securities depository settlement before developing anything new, and that if custody gets too ahead of itself, this could create additional problems.
He said: “Let’s focus [on getting] to the end of the avenue on which we have started.”
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