Peter Praet: The TARGET2-Securities Framework Agreement
Address by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at
the event marking the first signatures to the T2S Framework Agreement, Frankfurt am Main,
8 May 2012.
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Ladies and gentlemen,
It is no exaggeration to say that today is a historic date for the T2S project. It marks the end
of more than two years of negotiations on the T2S Framework Agreement, one of the most
critical legal documents underlying the whole project.
The President reminded us in his address of how important it is to cooperate if we want to
achieve our Single Market objectives. T2S is a clear example of the very good cooperation
amongst stakeholders in the post-trade industry: as of today, the spirit of the project will
move on from negotiation to cooperation. We shall work together with the CSDs to
implement T2S - for the benefit of the European financial markets.
I would now like to congratulate the CSDs that signed the Framework Agreement today.
They have demonstrated their willingness to adapt to change. They will play a central role
until T2S goes live by preparing and conducting the testing of the system, and they will help
us to ensure that the operations of T2S run smoothly from the beginning. This is especially
true for those CSDs that will transfer their operations to T2S as part of the first migration
waves. It is in acknowledgement of this contribution that those CSDs will be entitled to
financial incentives reserved for the early joiners . I am delighted to welcome them to T2S.
The CSDs that signed the Framework Agreement today represent about two-thirds of the
total settlement volume in the euro area. In addition, several other CSDs are expected to join
over the next few weeks, once their feasibility assessments are complete. In total, we expect
to reach more than 90% - possibly 100% - of the euro settlement volume by June 2012.
T2S is a truly European project, which is capable of generating great economies of scale and
of bringing benefits to its users and to Europe as a whole. It is a network business: the larger
the volumes settled in T2S, the more benefits for all of its participants, in terms of cost
reduction and collateral savings. A large participation in T2S will also result in a wide
harmonisation of practices and procedures across Europe - harmonisation, which will, in
turn, bring significant efficiency gains for T2S participants.
The close involvement of CSDs has been a crucial factor throughout the project so far, and it
will become even more crucial from now on. I wish to join the President in congratulating
those who have been involved in the project's governance.
T2S is an entirely new concept. It is unique and nothing comparable has ever been done
before. From the inception to the go-live, it will have required the engagement and
collaboration of numerous different stakeholders, from the industry, from central banks and
from other public authorities. Effective cooperation is key to the success of T2S. Decisions
need to take into account several different points of view, while ensuring that the final
outcome meets the objectives set in pursuit of deeper market integration in Europe.
This complexity is the reason why we had to develop a specific governance structure to
manage the project. Let me dedicate a few words to the governance bodies that have made
the T2S Framework Agreement a reality: the T2S Programme Board and the CSD Contact
Group.
The T2S Programme Board has run the daily management of the project up to now, regularly
reporting to the Governing Council of the ECB. I would like to thank the members of the
T2S Programme Board for their dedication and commitment over the past three years. They
have coordinated effectively the several work streams constituting the project and fulfilled the
mandate they were given by the Governing Council. They have made an enormous
contribution to making the project a success.
My gratitude also goes to the members of the CSD Contact Group, the main forum for the
Framework Agreement negotiations, which has played an instrumental role in ensuring that a
mutually satisfactory agreement could be reached.
Following the signatures of the T2S Framework Agreement in June, the role of these two
governance bodies will be assumed by their successor bodies: the T2S Board and the
CSD Steering Group.
In this new phase of cooperation, the T2S Board will concentrate on the implementation and
testing of the T2S platform, and then on the CSD migration to the new settlement
environment. The CSD Steering Group will articulate and coordinate the views of the
participating CSDs within the T2S governance. A major change to the current setting is that
the Chair of the CSD Steering Group will be a CSD representative. Together, the two groups
will cooperate to make sure that T2S delivers on its promises. I trust they will continue the
good work accomplished so far.
I would also like to thank the T2S Advisory Group. In the next phase of the project, this group
will retain its important function of ensuring that T2S delivers in line with market needs. The
group has provided invaluable advice to the Programme Board and to the Governing Council
over the past few years. The level of transparency on the T2S project through the Advisory
Group has been - I believe - unprecedented. This has certainly been one of the key drivers
of the project's acceptance amongst CSDs, market participants and political authorities.
Finally, I wish to thank the High Level Group T2S as well as the T2S teams both at the
ECB and the 4CB. Their work is not always visible, but it is invaluable.
Indeed it is thanks to their work "backstage" that the construction of the T2S platform is well
on track. The system is now over halfway to delivery point and the development and testing
of the application are proceeding on a firm footing.
On this basis, and with the signature of the T2S contracts, we now have the solid foundations
to continue building T2S and to transform post-trading in Europe, making it both more
efficient and safer.
We have taken a major step today towards making T2S happen. In years to come, we will
see the Eurosystem, participating CSDs, and market participants more widely working
together to make this project a success.
Thank you very much.