Clearstream’s monthly report

• TARGET2-Securities requires best-in-class asset servicing
• Clearstream Chair Tessler: “T2S is a fundamental shift in European capital market structure”

The pan-European settlement platform TARGET2-Securities (T2S) is gaining momentum. The third migration wave will take place next month, and more and more market participants now focus on optimising their operating model in a T2S world. “Although T2S unites settlement in Europe, the markets remain fragmented”, said Clearstream Chairman Jeffrey Tessler when presenting Clearstream’s monthly figures. This means that market participants need to find a service provider who can handle taxes, corporate actions and redemption payments in all T2S markets.

Clearstream will provide customers with a centralised access point to all T2S markets that is complemented by a best-in-class asset servicing, based on a partnership model with leading local agents. This way it can offer asset services in all connected countries. “T2S is a fundamental shift in European capital market structure”, Tessler, who is also a member of the Executive Board of Deutsche Börse, stated. According to him, T2S presents opportunities to do business in a radically new and cost effective manner.

This seems to be acknowledged by the finance industry. According to a study conducted by Accenture and Clearstream, asset servicing is a key strategic component of banks’ T2S strategies. In this survey, the importance of asset servicing was rated on average as eight on a scale of one to 10, clearly indicating the focus on asset servicing in a T2S context. Another finding of the study is that 90 percent of banks declare themselves ready and well prepared for T2S, and are confident in their overall operational strategy. The benefits of T2S highlighted by survey respondents include liquidity management, followed by settlement processing, collateral management and network rationalisation.

Clearstream will migrate to T2S in February 2017 during wave four. Afterwards customers will benefit from economies of scale and netting opportunities by consolidating all T2S-eligible assets at Clearstream, the largest T2S participant.