29 June 2017
Reporter: Stephanie Palmer

Harmonisation will mean success for T2S

More harmonisation and standardisation is required for the market to fully realise the intended benefits of the Target2-Securities (T2S) pan-European settlement platform, according to speakers at The Network Forum.

In a live poll, conference attendees were asked which of the planned benefits of T2S have been best achieved.

Some 37 percent of the audience named liquidity and collateral efficiencies, while process harmonisation and changing business models were considered benefits by 32 and 30 percent, respectively.

However, only 1 percent of respondents said they see benefit in direct transactional cost savings.

Allison Levy, director of asset servicing global product management for Europe, the Middle East and Africa at BNY Mellon, said that some of the benefits of the platform are “not so easily measured”.

She noted that, while cost savings may not have come about yet, T2S is likely to improve the back office and therefore lead to additional benefits.

The audience was also asked what could further materialise the benefits of T2S. Asset servicing harmonisation emerged as the most popular answer, named by 53 percent, followed by increased volume of cross-CSD settlement, selected by 36 percent.

Karen Birkel, chair of the change review group at the European Central Bank, suggested that in terms of asset servicing, corporate actions would be the most difficult thing to harmonise, saying: “There’s still a lot of work to be done there.”

Levy added that, while harmonisation would be “so welcome”, the markets each work so differently, so it “will be really tough to bring all of that together”.

However, another speaker, Swen Werner of State Street, suggested that one of the real benefits of the platform is that is has created a process of governance which “over time will bring some of the standardisation.”

Birkel added that CSDs have already “collaborated fantastically” to make T2S migrations work in the first place. The whole project is about collaboration, and about prioritising and solving problems in a collaborative way, she said.

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