ECB T2S offers opportunities

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Banks need to act swiftly in order to reap the benefits of the ECB initiative on Target2 Securities (T2S), according to a recent study conducted by Oliver Wyman and commissioned by Clearstream.

T2S is a European securities settlement engine aimed at the European post-trading industry. It aims to provide a single pan-European platform for securities settlement in central bank money.

Based on a series of quantitative case studies, the research concludes that banks could realize significant capital, funding and operating cost savings by delayering settlement-related exposures, pooling collateral for settlement and tri-party purposes, netting more cash settlements and simplifying their operations.

Consequently, it argues that brokers, custodians and regional banks could save between EUR 30 million and EUR 70 million per annum.

The study says that potential benefits of T2S go much beyond the initial scope of harmonising cross border settlements, facilitating among others a reduction of costs for cross-border settlements of financial transactions.

The full research can be accessed here: Clearstream and Oliver Wyman Study on T2S Benefits_September 2014.

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