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Target2-Securities may lead to increased costs, warns survey from SIX Securities Services

Post-trade services provider SIX Securities Services today releases data from a survey conducted at the SIBOS conference at Dubai, UAE. The survey acts as a barometer to current attitudes to Target2-Securities (T2S) amongst major European financial institutions.

On T2S and the cost of settlement

  • 63% believe T2S will increase the costs of settlement services in Europe in the short term
  • Only 38% believe the implementation of T2S will lower the costs of settlements services in Europe in the long term

On T2S and CSD consolidation

  • 88% believe T2S will lead to a consolidation amongst providers of settlement services

On preparations for T2S

  • Just 38% of respondents are certain their CSD is making adequate preparations for T2S

On T2S and collateral management

  • All respondents believe T2S will help their firm optimise collateral management

Thomas Zeeb, CEO, SIX Securities Services, commented: “The industry continues to be concerned that T2S will increase the costs of settlement services in Europe which is against one of the main aims of the project. Rather than insisting on a new settlement engine, it might have made more sense to tweak existing systems. As all CSDs will have to overhaul their systems, many will choose to pass costs on to their customers.

“However, T2S will provide some tangible benefits, most notably in helping firms improve collateral management processes. With high-quality collateral becoming ever more scarce, this can only be a good thing. T2S also presents an opportunity for the providers of settlement services. Consolidation will inevitably occur as with a single standardised settlement engine, there will be little need for financial institutions to split their business across multiple providers.”

The survey coincides with the launch of a new study on collateral management by SIX Securities Services. ‘Collateral Management – Can Collateral Values Prevent The Next Crisis’ is based on the views of senior figures responsible for collateral management at 60 leading financial institutions in the UK, France and Germany.