Three Euroclear central securities depositories (CSDs) operating in the eurozone, namely Euroclear Belgium, Euroclear France and Euroclear Nederland, have agreed to sign up to the Eurosystem's TARGET2-Securities (T2S) project.
Major settlement entities, such as the non-eurozone Euroclear UK & Ireland CSD, with its very large trading volumes via London, and other settlement operators still remain outside the centralised European clearing platform, which has attracted understandable wariness from established players in the field. European authorities are, however, still determined to push ahead with the project despite repeated delays.
According to Euroclear the migration date and fees for connecting to and using T2S in France and the Low Countries will be determined after the completion of market consultation. Euroclear Belgium, France and Nederland currently operate collectively on the shared Euroclear Settlement of Euronextzone (ESES) platform which settled 31 million securities’ transactions worth EUR87 trillion last year.
Euroclear says it has engaged in extensive market consultation and dialogue with all relevant national regulators and will finalise its assessment of CSD outsourcing arrangements with the relevant regulators before signing the T2S Framework Agreement.
With support from parent company Euroclear SA/NV, the Boards of the three CSDs have agreed for each CSD to sign the Agreement. As a result, Euroclear Belgium, Euroclear France and Euroclear Nederland will outsource settlement transaction processing to T2S. Clients of the three CSDs will continue to have accounts directly with the respective CSD and receive the full range of post-trade services from that CSD, with the migration and fees still to be set.
Commenting on the move, Joël Mérère, chairman of the boards of Euroclear Belgium, France and Nederland, said: "The three Euroclear group CSDs are reflecting local market sentiment by taking the decision to sign the T2S Framework Agreement. As the first and only group of markets in continental Europe to have consolidated and harmonised transaction settlement and custody services on a shared platform, we appreciate the benefits of large-scale processing consolidation and harmonisation that T2S has the capacity to provide."
According to Valérie Urbain, chief executive of Euroclear Belgium, France and Nederland, the firm has been preparing to operate within a T2S environment for some time. “Our asset servicing capabilities are expanding, and we are introducing collateral management services for clients in the Belgian, French and Dutch markets, as well as with some local central banks,” she said. “The depth and breadth of the domestic and cross-border post-trade services we offer will clearly help clients get the most out of the new operating environment in the easiest way possible."
By Neil Ainger