Benelux forum 2014 - T2S


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Presentation from the SWIFT Benelux Forum held in La Hulpe on 19/20 March 2014

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Benelux forum 2014 - T2S

  1. 1. SWIFT Benelux Forum How to get ready for T2S Isabelle Olivier Tanja Haase
  2. 2. Background of TARGET2-Securities (T2S) Why does Europe need T2S? Motives for the T2S-Project: • Europe’s securities markets are too fragmented and inefficient • There is a lack of competition in services related to settlement • Europe needs a single pool of securities to stimulate competition and harmonisation • There is no other realistic Europe-wide approach to create this single pool Making Europe a better place to invest and trade (in line with the Lisbon agenda)
  3. 3. T2S – Why? EU-US settlement flows comparison Source: « T2S – Settling Without Borders », European Central Bank, November 2009 TARGET 2 Securities (T2S) (as from June 2015) TARGET2 (RTGS, live since November 2007)
  4. 4. • Customers connect indirectly to T2S via CSDs • Need to retain existing relationships with multiple service providers • Minimizes the impact of T2S on the established structures and relationships Customer CSD Sub- Custodian TARGET2-Securities CSD CSD Sub- Custodian directtechnicalconnectivity Customer CSD TARGET2-Securities CSD n CSD 3 CSD 2 CSD 1 Customer CSD TARGET2-Securities CSD n CSD 3 CSD 2 CSD 1 directtechnicalconnectivity • Customers connect directly to T2S providing the most proximity to the settlement engine • Requires substantial investments • Connection to CSDs is still required for non-core settlement services • Customers connect indirectly to T2S via a CSD, which may replace existing links to agents, custodians and local CSDs • Significantly reduces operating costs • Considered as most optimized solution for majority of participants * Graphic: European Central Bank presentation „T2S: Settling without borders in Europe”, January 2012 Participants can communicate indirectly or directly with T2S
  5. 5. T2S Migration plan and timeline CSDs • Euroclear ESES (BE, FR, NL) • Interbolsa • NBB – SSS • BOGS • Depozitarul Central Romania • Malta Stock Exchange • Monte Titoli • SIX SIS Ltd • AS Eesti Väärtpaberikeskus • CDCP Slovakia • Euroclear FI • Iberclear • KDD Slovenia • CSDs of Lithuania • & Latvia • BNY Mellon CSD 9 months Wave 2 28/03/2016 Wave 3 12/09/2016 Wave 1 22/06/2015 6 months 5 months Wave 4 6/02/2017 Min 3 months Contingency Wave • Clearstream Banking • Keler Hungary • LuxCSD • OeKB • VP Lux • VP Securities
  6. 6. Confirmed DCPs in Wave 1 Wave 2 28/03/2016 Wave 3 12/09/2016 Wave 1 22/06/2015 Wave 4 6/02/2017 DCPs for securities and cash: • ABN AMRO Clearing Bank NV • BNP Paribas Securities Services • Citi • Clearstream Banking S.A. (CBL) • Deutsche Bank • European Central Counterparty • Iccrea Banca S.p.A. • Intesa Sanpaolo • Istituto Centrale delle Banche Popolari Italiane S.p.A. • LCH.Clearnet SA • Parel • Société Générale Securities Services S.p.A. • The Bank of New York Mellon SA/NV DCPs on the cash side only: • Banca Popolare di Sondrio • Banco Popolare Società Cooperativa • Cassa Centrale Raiffeisen dell’Alto Adige S.p.A. • Commerzbank • Kasbank • Monte dei Paschi di Siena • Morgan Stanley Bank • Société Générale • Unicredit S.p.A.
  7. 7. T2S Testing timeline Q3 Q4 Q1 Q3 Q4 Q3 Connectivity Bilateral I/O Multilateral I/O Community Business Day 20152013 2014 T2SWave1 Q2 Q1 Q2 Pilot Phase Go Live CSDs and Central Banks • Participate in all testing stages • Coordinate and support the testing activities of their communities CSD participants and Payment Banks • DCPs participate in the Connectivity testing stage • DCPs and ICPs participate in the Community and Business Day testing stages
  8. 8. Key concerns of ICPs What will my service providers’ offering be? How will my current communication be impacted by my provider’s requirements for T2S? What are the functional changes introduced by T2S? What opportunities do they bring? How can I leverage T2S opportunities without going direct? Who can help me assess the STP quality of Corporate Actions, Collateral, Liquidity communications from my different providers? …
  9. 9. Getting ready for T2S Familiarize with T2S • Understanding T2S functionalities, flows and messages • Training and knowledge transfer Impact assessment • Analyse impact on your messaging and processes • Standards gap analysis Design & Implementation • Design revised message flows • Implement changes &test with providers
  10. 10. T2S – ISO messages for liquidity and collateral management  Cash and Liquidity management  Auto-collateralisation (Central Bank/ Client collateralisation, Limit management, ...)  Bilateral collateral management (Repo & pledge, CCP scenario, …) T2S – ISO messages for securities settlement and management  T2S message flows and related services, illustrated against a specified business context and set of actors  Case scenarios to illustrate detailed message content for settlement, liquidity management, static data T2S in 90 minutes  Impact of T2S on different market players  T2S features: lifecycle management and matching, instruction maintenance, settlement, liquidity management, accounting day 10 SWIFT Training for T2S Understanding T2S-related messages and flows
  11. 11. ISO 20022 for S&R (and CA)  ISO 20022 for securities in the settlement and reconciliation (and corporate actions) lifecycles  Case scenarios to illustrate detailed message content ISO 15022 enhanced for ICPs  ISO 15022 enhanced messages, the new processes and flows behind  Case scenarios to illustrate new guidelines and implementation attention points BAH in T2S environment  Use of BAH both for securities and payments ISO 20022 messages in the settlement lifecycle  The chain and various scenarios between participants, CSDs and the T2S platform 11 SWIFT Training for T2S – what’s next Insight on future modules UNDER DEVELOPMENT
  12. 12. ISO 20022 for S&R (and CA)  Analyse potential of ISO 20022 richness to upgrade your services  Apply your local practice or CSD guidelines to ISO 20022  Build ISO 20022 scenarios and communication flows customised to your market/business  Map your current format with ISO 20022 and select the best options to manage gaps  Document and implement your new communication model (be it translation from/to or direct implementation of ISO 20022) ISO 15022 enhanced for ICPs  Apply your local practice or CSD guidelines to ISO 15022 enhanced  Build ISO 15022 enhanced scenarios and communication flows customised to your market/business  Map your current format with ISO 15022 enhanced and select the best options to manage gaps  Document and implement your new communication model (be it translation from/to or direct implementation of ISO 15022 enhanced) BAH in T2S environment  Business workshop(s) to build BAH scenarios in your specific business model, considering your role(s) in the settlement chain and the data to be sent/received from your service providers/customers  Technical workshop(s) to understand the technical aspects of implementing the BAH signature 12 SWIFT Consulting for T2S – what’s next Insight on future modules
  13. 13. A number of MT changes have been made to maintain compatibility with ISO 20022 as it evolves to support the requirements of T2S. Impact of T2S on financial messaging Standards gap analysis Domestic formats ISO 15022 (enhanced) ISO 20022 ICP ISO 15022 ISO 20022 T2SDiCoA Domestic ISO 20022
  14. 14. Standards gap analysis Example: New functionalities offered sese.023 MT 543 to deliver out a restricted balance must be “enhanced” i.e. refer to the restriction reference. ICP T2SDiCoA MT 543 T2S will allow CSDs and NCBs to define their own restriction types. Restriction types restrict the usage of a balance: - blocking - reservation - earmarking When a certain balance becomes restricted, T2S assigns a ‘restriction reference’ to which all subsequent messages have to refer to.
  15. 15. MyStandards for T2S and CSD Communities Easy access to your market guidelines and adaptation requirements ISO 15022 ISO 20022 ICP T2S ISO 20022 DiCoA  Use MyStandards to manage and publish T2S specifications  Consume the T2S specifications in MyStandards  Enrich, compare, manage and publish their internal specifications  Consume the specs of service providers via MyStandards.  Use the platform to document current capabilities and compare. ISO 15022 ISO 15022E ISO 15022E ISO 20022 Bridging the gap between ISO 15022 and ISO 20022 by introducing an intermediary layer: ISO 15022 Enhanced
  16. 16. ISO 15022 ISO 20022 ICP T2S ISO 20022 DiCoA Driven by your CSDs’/ agents’ specifications MyStandards Readiness Portal for T2S MyStandards Readiness Portal Migrating to new/ enhanced messaging Define scope of Implementation + business scenarios DiCoA flows with T2S MyStandards and the Readiness Portal Simplifying T2S implementation
  17. 17. Getting Ready for T2S User Testing Execution Coordinated testing services with SWIFT Present at every step of the process (strategy, planning, design, execution, quality) In-depth expertise in T2S business and technical domains Using best-in-class testing management tools Unique integrated set of products to automate testing against T2S usage guidelines Accompanying you till T2S connectivity testing over SWIFT VAN Customer resources Test Manager Business &Technical Experts
  18. 18. Getting ready for T2S Familiarze with T2S • Training courses on • ISO messages for securities settlement, liquidity and collateral management • ISO 15022 enhanced for ICPs • Etc… Impact assessment • Business Consulting: Impact Assessment studies & project management • Standards gap analysis • Message usage guideline definition • Etc… Design & Implementation • Technical consulting: functional and technical design • Testing services • Readiness Portal • Etc….
  19. 19. Thank You