SIA, in partnership with Colt, said it won the tender to connect Deutsche Bundesbank to TARGET2-Securities (T2S), the new centralised European platform for the settlement of domestic and cross-border securities transactions.

In other T2S news, BNP Paribas Securities Services formally announced its commitment to become a directly connected participant to T2S from the first wave of migration. BNP Paribas said it is the largest custodian in key T2S markets, with operations covering 95% of total projected settlements on the platform. 

Deutsche Bundesbank is one of the world’s largest central banks and is responsible for the continuous oversight of the solvency, liquidity and risk management systems of some 2,300 credit institutions in Germany.

Deutsche Bundesbank will be taking part in the first phase of migration to TARGET2-Securities, scheduled for June 2015. SIA and Colt expect the majority of transactions generated by banks and central depositories (CSDs) taking part in the first wave of migration to T2S to be carried on their network infrastructure.

“With the clock ticking on the first phase of migration to T2S, now is the time when CSDs and banks across Europe should be choosing their service providers. We are very pleased to be working on this project with Deutsche Bundesbank, one of the biggest central banks in the world,” said Colt Financial Services Solution Manager Hugh Cumberland.

Gian Bruno Mazzi, senior vice president at SIA, described the deal as prestigious. "At the same time, it provides significant confirmation of the fact that the market of network solutions and services for the European financial sector is open and competitive,” Mazzi said.

TARGET2-Securities, a project promoted by the European Central Bank (ECB) will be managed by Banca d’Italia, Deutsche Bundesbank, Banque de France and Banco de Espana. It is one of the initiatives for the creation of a single European financial market.

According to forecasts from the ECB, TARGET2-Securities will be capable of handling a daily average of more than 1 million securities transactions, contributing to a significant reduction in cross-border settlement costs.

The T2S platform is due to be rolled out across Europe in ‘waves’, the first of which is due in June 2015 and will cover settlements in Italy, Switzerland, Greece, Romania and Malta. 

Alain Pochet, head of clearing and custody services for BNP Paribas Securities Services said his firm was preparing for all kinds of client requirements in the run-up to the T2S implementation.

"Clients can link to T2S across multiple markets via a flexible account structure and with options to settle in commercial or central bank money. Alongside this service, we will also provide standalone local asset servicing for clients and institutions such as central securities depositaries, who will link directly to T2S but still need local support for processing corporate actions, income and tax," Pochet said. 

“T2S will harmonise a number of core settlement features, bringing efficiency and stability to our clients. But is not designed to handle all local market specificities and this is where we bring value.” 

The bank said it plans further service enhancements for liquidity management, as well as value added services for settlement such as prematching management, prioritisation and standing instructions. BNP Paribas is one of a group of providers to commit to the timeline following a call from the European Central Bank to sign up for wave 1 connectivity in order for them to prejudge the eventual scale for the platform required across Europe and begin testing. 

 

Eurex Clearing said the Federal Financial Supervisory Authority, BaFin, had authorised it as a clearing house in accordance with the European Market Infrastructure Regulation (EMIR), making it the fourth European group to get approval in recent days.

Eurex Clearing released a study that it said showed sell- and buy-side participants alike can substantially lower their capital and funding cost by actively pooling clearing business on an integrated cross-product CCP, with as much as 4-5 billion euros of incremental cost benefits to the European financial community.

Adam Cox reports

Earlier this week, we heard from several executives on ways to be innovative on the operational side. In the second of our two-part series, we hear from them again on transparency, measurement, organisational issues as well as what they’re working on right now.

 

KDPW_CCP said the Polish Financial Supervision Authority had authorised it as a clearing house, confirming it fulfils all requirements under the EU Regulation EMIR.

EuroCCP said it completed the consolidation of EuroCCP Limited and EMCF NV, creating the largest cash equities clearer in Europe and helping members lower their costs.