TARGET2-Securities: overview Infosession on T2S auto-collateralisation

Patrick Van den Eynde T2S BENUG Secretary Driver for T2S Ź to stimulate the integration of the securities post-trading infrastructure in Europe

EUROPE UNITED STATES

Nasdaq Euro- London BME Deut sche Nasdaq MTFs e.g. NextEuro- London Bor sa SIX MTFs e.g. BME Deut sche OMX MTFs e.g. LU S.E. Next Stock Bor sa SIX N Y SE MTFs e.g. N asdaq T rading Gr oup Bör se OMX Chi-x / Turquoise LU S.E. PT, BE, Stock It ali ana Group N Y SE BATS N asdaq Gr oup Bör se Nordic Chi-x / Turquoise FR,PT ,NL BE, Exchange It ali ana Group BATS Nordic FR, NL Exchange

LCH. Eur ex Euro- LCH. CassaDi SIX-x Eur ex EMCF Euro- LCH.Clear net SA Clear net CassaDi SIX-x NSCC FICC Clearing EMCF CCP LCH.Clear net SA Clear net Comp Clear NSCC FICC Clearing CCP Ltd. Comp Clear Ltd.

Clear- strClear- eam Securities Bankingstr eam Eur oclear Banking Iber Frankfurt Inter Mont e Iber Frankfurt VP C SD Inter Mont e SIS clear VP C SDX Bolsa Titoli SIS DTCC & A sset clear Clear- X Bolsa UK Titoli DTCC strClear- eam servicing str eam BE FI FR NL SE & Banking IE Luxemb.Banking Luxemb.

FED FED

… NCBX … … … NCBX … … Cash SNB settlement SNB

2 / 14 T2S overview Aim of T2S is Ź to provide a single harmonised venue where almost all securities circulating in Europe can be settled with standardised communication protocols and harmonised market practices Ź to lower the currently high costs of cross-border securities settlement and to bring a more general reduction in the total cost for settlement Ź to foster financial stability by settling in Money Ź to offer a number of advanced and new facilities (optimisation functionalities like auto- collateralisation, priorisation, partial settlement, ...)

3 / 14 T2S overview What is T2S?

A single IT Core T2S technical Neutral platform Borderless securities settlement

Harmonised DvP in CeBM

A solution An entirely new to the current concept Reversed integrated model fragmentation

Multi-currency dimension

4 / 14 T2S overview A single IT platform for DVP settlement in central bank money

VALIDATIONVALIDATION and and MATCHING MATCHING TARGET2

CENTRALCENTRAL BANK BANK CENTRALCENTRAL BANK BANK SECURITIES MONEYMONEY MONEYMONEY

CSDCSD AA NCBNCB A A CSD A ACCOUNTS NCB A ACCOUNTS NCB AA ACCOUNTS OPTIMISATIONOPTIMISATION of SETTLEMENT

CSD B CSD B ACCOUNTS SETTLEMENT NCB B ACCOUNTS NCB BB ACCOUNTS ACCOUNTS NCBNCB BB and REALIGNMENTREALIGNMENT

CENTRALCENTRAL BANK BANK MONEY CSD C MONEY NCBNCB C C CSD C ACCOUNTS NCB C ACCOUNTS NCB CA ACCOUNTS ACCOUNTS

Other RTGS

5 / 14 T2S overview T2S as a single Settlement platform Ź CSDs participating in T2S will outsource their securities accounts to the single platform Ź CSDs remain legal owner of these accounts and stay responsible for customer relations Ź NCBs will create and hold Dedicated Cash Accounts (DCA) for their payment banks on the same technical platform Ź settlement of Delivery-versus-Payment on T2S will take place by simultaneously adapting securities accounts and DCA

6 / 14 T2S overview Expected results of T2S Ź reduction of settlement costs Ź banks can centralise back-office operations Ź banks can optimise liquidity (one DCA for settlement in all T2S CSDs) and collateral management Ź efficiency gains thanks to market practices harmonisation triggered by T2S (single settlement schedule, single calendar, single set of matching standards, common standards for corporate actions processing, ...) Ź increased competition between CSDs and intermediaries

7 / 14 T2S overview Broader perspective

Ź Europe will become a better place to invest Ź issuers will benefit from a more diversified investor base Ź securities markets will become more liquid and more attractive

8 / 14 T2S overview T2S Governance Ź owned by the and technically on the same platform as TARGET2 Ź is being developed on the foundations that have been laid by market participants (User Requirements Document) Ź strategic decisions by ECB Governing Council Ź conduct of the project by the T2S Programme Board Ź development by 4CB Ź user forums: T2S Advisory Group (CSDs, NCBs, future end users), National User Groups

9 / 14 T2S overview T2S Contractual Relationship with CSDs

Ź CSDs that signed the Framework Agreement on 8 May: Ɣ Bank of Greece Securities Settlement System - BOGS (Greece) Ɣ Clearstream Banking AG (Germany) Ɣ Depozitarul Central (Romania) Ɣ Iberclear (Spain) Ɣ LuxCSD S.A. (Luxembourg) Ɣ Monte Titoli S.p.A. (Italy) Ɣ National Bank of Belgium-Securities Settlement System – NBB-SSS (Belgium) Ɣ VP LUX S.à.r.l. (Luxembourg) Ɣ VP Securities A/S (Denmark) Ź non-euro NCBs are invited to sign the Currency Participation Agreement

10 / 14 T2S overview 11 / 14 T2S overview 12 / 14 T2S overview 13 / 14 T2S overview Further topics for today

Ź relationship T2S-T2 Ź T2S auto-collateralisation functionality

14 / 14 T2S overview