Flurry of initiatives show confidence in ‘on time’ T2s

Momentum is building behind the European Central Bank’s (ECB’s) Target2-Securities (T2S) settlement platform. With the ECB confirming the platform will be delivered on time, further proof of the industry’s confidence in the initiative has come via a series of announcements regarding connectivity to T2S.

Yesterday, international central securities depository (ICSD) Clearstream announced that it would be connecting to T2S via Swift’s Value Added Network (VAN) solution. The ICSD plans to migrate fully to T2S in September 2016.

Rival ICSD, Euroclear, also announced its intention to opt for Swift connectivity. Speaking exclusively to Daily News at Sibos, Philippe Verriest, director, head of business analysis communication and information services at Euroclear, said the depository is in discussions with Swift about implementation of the T2S link.

The moves are something of a surprise as until recently many industry observers believed the large ICSDs and CSDs, along with the biggest global custodians, would take the direct connectivity route into T2S. But as reported in yesterday’s Daily News at Sibos, enthusiasm for the direct approach seems to be waning as institutions consider the total cost of such a move.

“Clearstream selected Swift to connect to T2S because, having utilised Swift network services for years already, we knew this would offer us – and in turn our customers – the right level of resilience and reliability for connectivity in the future T2S world,” said Mark Gem. “We trust Swift as the proven connectivity specialist to do the part of the T2S work it is best at, namely messaging and financial telecommunication.” This will enable Clearstream to focus on its core business and add further services such as standards management and testing to augment its T2S offering, he added.

Earlier this week another ICSD, SIX Securities Services, announced that it would take the Swift route to T2S. “As the only current provider of ICSD services joining in wave one of T2S, we are demonstrating our commitment to offering our community the highest levels of service in the T2S environment,” said Thomas Zeeb, chief executive of SIX Securities Services. “Swift’s connectivity solution for T2S is the right foundation for our offering, bringing the resilience, reliability and competitive pricing we need.”

And this morning, Spain’s CSD, Iberclear, announced its decision to connect to T2S via Swift VAN. It will go live on T2S in February 2017. Jesús Benito, chief executive of the CSD said: “We are focused on offering post-trade solutions that provide our community with the highest levels of security, stability and scalability. We are confident that Swift is the right T2S connectivity solution for us, bringing unmatched benefits in terms of resilience, price, proven infrastructure and re-use of expertise.”

Migration to T2S will take place in four waves – 1 June 2015, 2 March 2016, 3 September 2016 and 4 February 2017. Direct connectivity participants must declare their intentions to use this route by October 2013.

“Direct connectivity would have been a very good alternative for Euroclear, but the implementation risks of such a move were bigger for both us and for the eurosystem,” said Verriest. “That tipped the balance and we decided to opt for Swift.”

Swift is one of two approved connectivity options for T2S, the other being a partnership between SIA and Colt. “SIA and Colt are ready for T2S,” said Daniele Ravelli, marketing manager at SIA.

“We are proposing a solution to the banks. No direct connection is needed and we are cheaper than Swift. We are the bridge between the corporate and the bank.” He would not divulge, however, who had signed up as users.