Full market integration is the only way the European Central
Bank’s securities settlement platform can live up
to its original promise according to experts at
TARGET2-Securities, more commonly known as T2S, is a
single, pan-European platform for
securities settlement in central bank money.
It is one of the largest infrastructure projects launched by
the Eurosystem so far and involves 20 central securities
depositories (CSDs) and national banks.
The fourth migration wave occurred in February and meant
Europe took a crucial step forward towards a harmonised
The aim of T2S is to bring substantial benefits including
price, risk reduction, collateral savings and back office
streamlining to the European post-trading industry.
Delays, however, have damaged faith in the project while
connection costs have been high and transaction volumes well
below what many had expected.
"The system works perfectly. But this does not mean that T2S
has already achieved its ultimate goal," Marc Robert-Nicoud,
chief executive of Clearstream Holding AG, wrote in a note this
"The technical integration of the European settlement
systems can only be a first step.
"Now, the integration on market level has to follow lead.
This is the only way how T2S can live up to its original
promise: to make cross-border settlement easier and more
efficient for market participants."
In recent years there have been many efforts to harmonize
Europe’s financial markets.
Robert-Nicoud added that the current strained political
relations between EU member states and third countries,
nationalistic tendencies as well as the looming Brexit are
subjecting the Capital Markets Union (CMU) project to severe
Against the current political backdrop, he warned that it is
key for policy makers and stakeholders to focus on the
execution of CMU objectives.
"Initiatives such as the implementation of a new payment
system TARGET2 (T2) and the securities settlement platform T2S
show how pan-European cooperation can deliver progressive
concrete solutions," Robert-Nicoud added.
"Over the past ten years, more than 20 central securities
depositories, national central banks and the European Central
Bank all pulled together, in order to make the complex T2S
project a success – and thereby set European
"In order to fully harness the potential and wider benefits
of such developments, we need to clear away some serious
obstacles on the path to a Capital Markets Union in Europe.
"Further alignment will be necessary of the various European
regulatory initiatives with the objectives of market
integration initiatives such as T2S."