T2S The journey to harmonisation

As the introduction of T2S approaches quickly, Europe is bracing itself for a transformed market with fewer international barriers. But just how will T2S impact the industry?

Europe’s post-trading landscape is about to experience a dramatic change following the introduction of Target 2 Securities (T2S). The aim of T2S is to reform the industry by providing a single pan-European platform for securities settlements in European Central Bank (ECB) money. 

The provision of post-trading services within Europe has remained highly fragmented along national lines. This lack of integration has led to high costs for cross-border settlement transactions. The introduction of T2S will begin the process of establishing a truly integrated capital market across Europe, harmonising post-trading settlement activities by removing cross-border barriers and inefficiencies. T2S will reduce the costs and risks commonly associated with post-trade settlements and encourage more competition within the industry.

T2S will have a major impact on market participants and it will force many to review their business models and services as they look to adapt to the new environment. In anticipation of these reforms, the International Capital Markets Association (ICMA) and GFT launched a joint survey in the summer of 2014. Commissioned by the European Repo Council (ERC), the survey looked at industry readiness and attitudes towards T2S. In particular, the survey analysed the awareness levels and understanding of market participants regarding T2S, as well as the depth of practical engagement and understanding they have regarding the consequences on their individual firms.