T2S made easy: No matter how your business evolves, we’re here to support you throughout your journey to T2S and beyond with choice of access to T2S, comprehensive asset servicing and state-of-the art collateral management
2. 2
T2S
• Single securities settlement platform for Europe with opportunities for centralised liquidity
• Intra and cross-CSD DVP settlement on links between CSDs connected to T2S
• Direct connectivity to T2S available for clients
• Clients keep legal and business relationship with CSDs
!
But
• T2S only manages “lean” settlement and some market specifics will remain
T2S
4. 4
• Balance sheets will continue to structurally deleverage
• Funding will have to be collateralised
• OTC markets driven to central execution and clearing
• Growing pressure on cost
AIFMD EMIRT2S
FTT R&R CRD IV
UCITS V Basle 3
T2S is only part
of the challenge
5. 5
making choices
under uncertainty
Profile
•clients segment and size
•market proximity
•access to liquidity
?Business needs
•market coverage
•service level
•asset protection
•operating model
•operational efficiency
Uncertainty & capacity
•cost (development, running)
•internal roadmap & timing
•flexibility and strategic agility
6. 6
a unique and flexible access to
harmonised services
reducing cost,
complexity,
and
uncertainty
harmonised services
independent of asset location
access to all counterparties
in Europe
single entry point with
effective centralisation
Euroclear value proposition
8. 8
• DVP multi-currency CoBM settlement
with seamless cross-border access to
T2S counterparties
• European & international securities
• Book-entry settlement
• Clearstream bridge
T2S made easy
3 ways to access
• DVP CeBM settlement in Euro
• Efficient cross-CSD settlement on T2S
• All European markets
• Remaining barriers (e.g. primary
dealership / stock exchange) or
client segment may require some
firms to access markets directly
• Selected markets like ESES,
Germany, Italy and Spain
+
global
ICSD access
single CSD access
for European markets
direct CSD access
operated by Euroclear
any combination with a unique access point
1 2 3
13. 13
• Multi-market, harmonised value-added services regardless of asset location
- Efficient ISO-based end-to-end CA announcements & processing
- Competitive close-to-market CA election deadlines
• Comprehensive tax relief & reclaim management
• Automated market claims & transformations
• Efficient voting services
• Proactive & dedicated support by local market experts
asset servicing
14. 14
A single pool with Collateral Highway
• An open architecture with access to all features including AutoSelect, Open Inventory sourcing
and full re-use
• Optimising and mobilising a single pool of collateral across time-zone and location
• Access to large range of C/P
- more than 90 central banks and major CCPs
Transformation du
Collatéral
Custodians
CSDs
Agents
CCPs
Banques Centrales
Banques
collateral management
15. 15
communication
ISO messaging
• Highly reliable computer-to-computer access for automated high-volume users
• Single connection for settlement and other (I)CSD services
• Choice of network provider
• ISO15022 or ISO20022 message format
• Scale benefits when using Euroclear for direct access to T2S
16. 16
communication
EasyWay
• new end-to-end user experience
• web-based exception management tool
• top-down and risk-oriented (alerts, deadline manager)
• multi-market / multi-location / multi-entity
• consistent navigation across services
19. 19
Euroclear Bank approach to T2S
• EB will not outsource settlement to T2S but will adapt its links to the T2S CSDs
► Align with each T2S CSD adaptation plan
► Ensure the highest level of interoperability
► Become a Directly Connected Participant (DCP)
► Cover T2S markets and instruments
!
• In terms of client impacts our aim is to
► Shield you from major impacts
► Limit mandatory changes on external instructions
► Allow you to use T2S functionalities on external instructions
► Extend the use of T2S functionalities to internal instructions
► Continue to provide value added services
20. 20
Euroclear Bank approach to T2S.
Euroclear Bank offers you the flexibility to choose your own approach:
•“Shield”
•“Adopt”
!
•“Shield”:
► You are keen to continue working as much as possible as today.
► Changes will be limited to the mandatory changes made by T2S:
– You should advise us of the BIC11 we need to use to identify you.
– T2S doesn’t allow for dump instructions: we will ask you to always instruct
a receipt instruction.
– T2S will use additional matching fields which influence market claims and
transformations: discuss the use of these fields with your counterparties.
21. 21
Euroclear Bank approach to T2S.
• “Adopt”:
► You are keen to change your way of working to make full use of the T2S
functionalities.
► You can choose to make all changes or only part of them.
► You can implement the changes at your own pace.
► The changes are linked to
– The use of optional matching fields,
– The availability of new settlement features in T2S (hold & release, partial
settlement,…)
– A new allegement service
► To benefit from the new functionalities and the improvements to reporting,
an update to the connectivity channels will be required (EUCLID and SWIFT).
22. 22
For external use
Night
Time
Settlement
Real
Time
S-1
REAL TIME SETTLEMENT
Mandatory Optional*
REAL TIME SETTLEMENT FOP
Pre-
positioning
T2S features - settlement
Harmonised operational day
Night time
settlement
Real
Time
Cycle 1 Cycle 2
!
18:00 19:30 05:0001:00 16:0003:00 18:00
18:45
Partial
Settlement
Partial
settlement
00:00 01:30 16:00 19:0019:00 22:00
Send inx Feedback
* Optional window for internal settlement at EB till 19:00
External settlement will take place till 18:00
!• Pre-positioning for
all T2S CSDs
(external
settlement)
between 18:45 and
19:00 on S-1
!• Intended alignment
of Euroclear Bank
internal settlement
input deadline with
T2S deadline
Partial
settlement
Euroclear
Bank
Start of
the dayT2S
14:00
Maintenance
window
23. T2S features - settlement
Instruction types
23
For external use
!
•As today
► DVP and FOP
!
•New
► Receipt with payment (RWP)/ Delivery with
payment (DWP)
► Payment free of delivery (PFoD) – cash only
instruction
► Already matched instructions
!
•No longer available
► Dumps
► Bi-party repo instruction types
!
T2S
Mandatory
•Receipt instructions for all external instructions (change for ESES
markets)
•Instruct both legs of a bi-party repo (external instructions only)
Optional
•New instruction types (RWP, DWP and PFOD)
•New reporting to identify all new instruction types
•Instruct both legs of a bi-party repo (external instructions only)
!
Euroclear Bank settlement
External Internal
DVP/FOP ☑ ☑
RWP/DWP ☑ ☑
PFoD ☑ ☑
Dumps ☒ ☑
Already matched ☒ ☒
Bi-party repo inx ☒ ☑
24. T2S features - settlement
Matching criteria in T2S
24
For external use
3 types of matching criteria:
!
•Mandatory matching criteria :
► Required for validation
!
•Additional matching criteria
► For market claims and transformations
► Both parties to agree on use of fields
► If left blank, market claims/transformations will be triggered if eligible
!
•Optional matching criteria
► To avoid cross-matching
► Can be used by 1 party only (matches against blank)
!
!
!
T2S
25. T2S features - settlement
Bilateral cancellation
25
For external use
!
Matching is binding
cancellation is only possible if both
sides send a cancellation request
T2S
!
Existing service
• Cancellation request forwarded to the market
• Instruction in Euroclear Bank cancelled upon market
cancellation
!
New service
• Advice of counterparty cancellation request
• Status of your cancellation request
► Rejected - by T2S
► Recycling - pending counterparty cancellation
request
► Cancelled - instruction cancelled in T2S and in
Euroclear Bank
Euroclear Bank external settlement
Optional
•Ensure system capability to correctly read new status
reporting
•EUCLID hotfix
!
26. T2S features - settlement
Partial settlement
26
For external use
!
Three partial settlement windows
• During last cycle of the night-time settlement
• Between 14:00 and 14:15
• Between 15:45 and 16:00
!
Partial settlement indicator
• Partialling by default
• Opt out possible – NPAR
!
Booking of T2S partial settlement
•Feedback upon confirmation from T2S
• Instruction cancelled and replaced by 2 new ones – retaining
reference:
• settled instruction
• positioned (pending) instruction
!
New ‘opt out’ service
Opt out at account level i.e. for all T2S external instructions
T2S Euroclear Bank external settlement
Optional
•Use opt out indicator – NPAR
•Subscribe to the new ‘opt out’ service
!
!
27. T2S features - asset servicing
27
For external use
Lean settlement
•no asset servicing as such but
!
Settlement instructions used for
•Credits and debits of cash and securities
•Market claims and transformations
► Created as independent instruction
► Same instruction details as the mother
instruction
► Eligible for partial settlement
!
!
!
T2S
No impact for
•Mandatory cash distributions
•Mandatory securities distributions
•Reorganisations
•Voluntary events
•Tax processing
•Proxy voting
!
Impact on market claims and transformations
•available for more instruments
•additional matching fields
•created as an independent settlement instruction
•additional reporting as settlement instructions
•same process for internal instructions
Euroclear Bank asset servicing
Mandatory
•Advise your counterparty if you intend to use additional matching
criteria
Standards cover
•Mandatory cash distributions
•Mandatory securities distributions
•Mandatory and voluntary reorganisations (with and
without options)
•Voluntary events
•Market claims
•Transformations
•Buyer protection
!
CAJWG
!
28. Overview of changes and timeline
Mandatory changes
28
For external use
June 2015 March 2016
- Always input a receipt instruction
(change for ESES)
!- Instruct both legs of a repo (external
inx only) – if you intend to use this
service
- Advise us of the BIC11 we should use
to identify you
!- Agree with your counterparty on the
use of additional matching criteria
29. Overview of changes and timeline
Optional changes
29
For external use
June 2015 March 2016
- CCP settlement of Euronext
equities (with LCH. Clearnet SA)
become external instructions
!- Cross-CSD settlement:
use BIC11(PSET) to indicate the
remote market in case of a
multilisted security
!
TBC
- Send instructions on hold « PREA »
and release via MT 530 – Sept 2016
!- Start using buyer protection
service - TBC
- Review your static data for DEAG/REAG
!- Update your instruction formats if you do not
want partial settlement
!- Update your instruction formats to use the
optional matching fields
!- Take into account the upgraded reporting
for
- allegements
- partial settlement
- cancellation
- hold & release (CPTY hold, CSD hold)
!- Subscribe to the allegement service based
on BIC11
Pre-T2S
- Install the EUCLID
hotfix
!- Ensure system
capability to correctly
read new SWIFT
reporting
30. 30
Euroclear Bank approach to T2S
Where to find more information?
• General information:
► T2S banner on www.euroclear.com (public part)
!
• Towards T2S – quarterly publication at group level
► 1st issuance: March 2014
!
• Dedicated Newsletters on T2S adaptation
► Getting ready for T2S – what does it mean for you as Euroclear Bank client? (Oct 2013)
► Plan ahead to T2S – changes to input, reporting and connectivity (Feb 2014)