Europe's infrastructures for securities settlement have
always been fragmented. As a remedy for this, the
Target2-Securities project (T2S) was launched in 2007 with the aim
of reducing the barriers to cross-border security settlement in
Europe. Almost ten years later, T2S went live: since June 2015,
five Central Securities Depositories (CSDs) have been on the
platform, including the domestic Italian CSD Monte Titoli. The
platform currently settles around two million transactions per
month and seems to show more and more resilience. A Monte Titoli
executive stated, at the Clearing and Settlement conference in
March this year, that there have been "no major issues"
since the first weeks of operation and that the ECB was a
"fair and responsive" service provider. This is
promising, looking ahead at the remaining 80% of the settlement
volume still to be migrated to the platform.
T2S Wave 2 went live at the end of March, and no issues have
been reported so far. There are no questions anymore regarding
whether T2S will happen or not—it's here and it works.
The next step is now to understand how it will transform the
ecosystem in the coming years and how
new technologies such as blockchain may be incorporated to
The ECB is also already looking ahead at integrating T2S and
Target2 (T2), a platform for payment in Euros. On the agenda are,
among other things, a collateral management module for Eurosystem
operations, merging the T2 Single Shared Platform with T2S, and
providing an instant payment component. In other words, another big
How could T2S affect the fund industry?
There have been discussions in the past about investment funds
and whether, on the new T2S platform, some or part of the volume
settled by Transfer Agents (TA) will be done instead by CSDs in
Euros / central bank money. Because TA and CSD models respond to
different needs, they will coexist for a while as long as there are
multi-currency, multi-jurisdiction requirements. The CSD model has
been used for years in France and Germany for domestic distribution
and these local models will also be ported on to T2S. Thus, whether
or not there will be a single model is no longer a
question—there will be multiple ones. The TA model is
flexible and portable, which has many advantages, whereas the CSD
model is industrialised and scalable, which is the better choice if
reducing cost is a main driver.
The following chart characterises the different models in the
What T2S brings ultimately is not a change to the way CSDs
distribute domestically, but a change to the way cross-border
distribution can be envisaged across Europe, since the ecosystem
will be deeply modified once true competition kicks in. The loss of
settlement revenues, the newly introduced competition, and the
technical facilitation brought by "CSD linkages" will
attract CSDs to an area where custodians and global custodians were
previously masters of the game. Leveraging on their international
CSD ("ICSD") experiences, the big European CSDs will
evolve towards being investor CSDs and service not only domestic
assets but foreign ones, extending their inbound and outbound
networks to aggregate assets and counterparties. Thus, the lines
between traditional asset servicers and infrastructure players will
be increasingly blurred. Today's distributors might not be the
ones of tomorrow. TAs will face increased competition for the
processing of subscriptions and redemptions, as well as for
Down the road
Subscribe today, get your units in three to five days. At a time
where settlement cycles have been brought to T+2 thanks to CSDR,
fund units settlement still lags behind due to NAV and cash
frictions. With instantpayment and blockchain being
the buzzwords of the year, it's easy to picture the disruption
potential in Luxembourg's investment fund business if you look
at the transformations that have already begun in the clearing and
settlement industry. Will T2S be part of this equation? One step at
a time, Luxembourg's fund industry needs to face the changes,
but more importantly to assess what's coming and to reflect on
how it needs to evolve to remain competitive.
The Association Luxembourgeoise des Fonds
d'Investissement (ALFI) has launched working groups to
examine T2S's impact on the fund industry by looking at
different aspects (cash, issuance, and others). It is currently
preparing a paper, which KPMG Luxembourg has contributed to, with a
publication date set for September 2016. Watch this page for
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The SuperReturn International series consists of 15 annual international private equity & venture capital events held in Europe, Asia, Africa, Middle East and the US. This happens to be the European event for the year. Spread across five days, starting from 27 February, the largest private equity event worldwide will take place in Berlin this year.
Some of the main subjects being discussed at this year’s conference are; The Geopolitical and Economical happenings of the last 12 months, Innovation Disruption & Tech Expertise and many more. As previously eluded to, there will be over 400 presenters, all bringing their own perspective and stance on specific topics to the table. Companies such as Google, Visa, Bloomberg and many more will all be represented throughout the five days.
KPMG Associate Partner, Nic Müller, will be speaking on 28 February at 3pm: “Why invest in the mid-market today”.
Given the societal challenges and environmental issues we currently face, the circular economy concept has rapidly been gaining in importance. This is why the Luxembourg government is pressing ahead in setting up the framework for the third industrial revolution, in which a circular economy is a key pillar.
The International Accounting Standards Board’s (IASB) insurance contracts standard, IFRS 17, is expected to significantly affect data requirements and the systems and processes used for data collection, actuarial projections, and on calculating and accruing interest.
In discussion with insurers around the world, we found that most expect to face challenges accessing and handling data of the right quality and granularity under the new standard. And many see significant effort associated with capturing, storing and analyzing this information given historical data quality and the use of legacy systems.
In the third of our webcast series - Impacts of IFRS 17 on data, systems and processes - we will share practical examples of how the forthcoming standard may impact an insurer’s current systems architecture. In addition, we will explore the data that will be required and how the standard will influence new estimates, computations and processing. We will also share lessons that we have learned from helping insurers through Solvency ll and the importance of developing a data management policy early on.
The Ministry of Financial Services, Commerce and Environment has prepared 11 bills to strengthen Cayman's regulatory framework, introduce new financial services vehicles, and improve the local business environment.
Over 150 attendees from both New York and the Cayman Islands recently gathered at the 4th annual Cayman Finance New York Breakfast Briefing held at the Harvard Club of New York City at which Cayman Finance CEO Mr Jude Scott described Cayman as "the premier global financial hub".
This article will explore existing real estate property management solutions, focusing on the top private equity real estate platforms in the marketplace, including subject matter expert's viewpoints on the existing software infrastructure.
Of those assets there is a wide range, including hedge funds, private equity, debt and property funds.
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