TARGET 2 Securities
Time to settle
T2S (TARGET 2 Securities) will connect participating national Central Securities Depositories (CSD) to allow seamless and uniform securities settlement in central bank money.
T2S offers many benefits to not only its direct participants, i.e., the CSDs, but also to all the clients making use of the respective CSDs. The system, which is based on central-bank-money payments, is safer and more independent than other systems as the Eurosystem is responsible for running it. Indeed, due to the composition of the Eurosystem, it is neutral with respect to all countries and stakeholders. Additionally, the running of the T2S system is not incentivized by economic motives. Rather, its goal is to create a pan-European settlement system that is comparable in its simplicity to a domestic system, in terms of cost, technical processing and efficiency.
Furthermore, the present market infrastructure is highly complicated, requiring the interaction of multiple CSDs with their own sets of rules, rates and modus operandi; T2S aims to untangle this web of complexity and establish a set of universal rules and methods to apply to T2S and therefore, all participating CSDs. Not only would this lead to a significantly simpler system, but it would also lower the costs of cross-border transactions and fees.
Inside Magazine issue 12, June 2016
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