Payment systems

TARGET2-Securities

TARGET2-Securities (T2S) is a Eurosystem project, designed to facilitate the centralised settlement in central bank money of securities transactions in the euro or other currencies. It uses synergies with other Eurosystem utilities, particularly the TARGET2 payment system.

T2S is aimed at Central Securities Depositories (CSDs), to which it offers the possibility of using a common technical solution for settling securities transactions. The CSDs will maintain business relations and contracts with participants and continue providing custody and administration services for securities (such as managing corporate rights), as well as other added value services.

By grouping securities accounts and cash accounts on the same platform, T2S will offer an integrated settlement service that is neutral, borderless and with state-of-the-art functions.

T2S constitutes a major step forward in the delivery of a single integrated securities market for financial services. It will put European cross-border securities settlement on a par with like domestic settlement in terms of efficiency and cost. Furthermore, it will complement and facilitate other European initiatives in the securities industry, such as the Code of Conduct on Securities Clearing and Settlement, the harmonisation efforts through the Giovannini process and the Markets in Financial Instruments Directive (MIFID).

Project status

On 8 March 2007, the Governing Council of the European Central Bank (ECB), having considered the feasibility study carried out by the Eurosystem, reached the conclusion that T2S was a viable project. As a result of this decision, a document was drawn up to bring together user requirements, in close collaboration with the CSDs and market participants.

On 17 July 2008, bearing in mind said requirements and the support received from the market, it decided to launch the T2S project and to provide the resources required. It also decided to assign the development and operation of T2S to the Deutsche Bundesbank, the Banco de España, the Banque de France and the Banca d’Italia (the group of central banks known as 4CB).

Of particular note among the documents drawn up are the General Functional Specifications, published on 21 January 2010. Work is currently ongoing on the Detailed Functional Specifications, which will be published shortly. T2S is expected to come into operation in September 2014.

Governance Structure

The T2S project belongs to the Eurosystem and responsibility for the programme therefore falls on the Executive Board and Governing Council, as the highest decision-making bodies, although it is being developed in close collaboration with all market players.

The governance structure has evolved as the project has progressed, always based on the principle of transparency, an aspect which the market has valued highly.

On 19 March 2009, the Governing Council decided to set up the T2S Programme Board (PB), granting it responsibility for the programme and for relations with the market and the 4CB. The PB submits proposals to the Governing Council regarding strategic project affairs.

From the beginning of the project, an Advisory Group was created involving all the central banks, central securities depositories and users, together with other authorities and institutions interested in the project. Its function is to support the project in the definition of user needs and to ensure that the general and detailed specifications meet said needs. It also assesses price policy and harmonisation within the context of securities settlement systems for T2S. The Advisory Group has set up substructures to prepare specific issues.

Subsequently, a Contact Group was set up with the CSDs. It is the group responsible for negotiating and preparing the contract between the Eurosystem and the CSDs.

Another specific group has likewise been set up to negotiate and draw up the contract with the central banks from outside the euro area.

In Spain, as in each country participating in the Eurosystem or in other interested European states, a National User Group (NUG) has been created to identify the concerns, worries, specific characteristics and interests of the national agents involved in T2S. One of the ways to express an opinion is by responding to the mini-consultations presented by the Advisory Group substructures.

Furthermore, the ECB holds regular information sessions to report the status of the project to the market as well as any other major issues under discussion at any given time.

The ECB website offers detailed information on various aspects of the project and the groups that make up its governance structure.