TARGET T2/T2S Consolidation Project – Successful & timely adaption of the new TARGET platform
We support our clients to manage and meet the tight deadlines from the TARGET T2/T2S Consolidation Project in terms of impact analysis and requirement engineering for development as well as on migration and use of TARGET Date Migrating Tool (DMT) , user training and TARGET certification testing. In addition, we provide insights into the functionalities of the new TARGET platform and the potential to leverage such functionalities to optimize and automate liquidity management, support data analysis, insource/outsource tasks and extend the current product scope.
The consolidation project timelines cannot be missed. Our clients can rely on our expertise to ensure readiness for all deadlines set by TARGET to be allowed to continue using their services post the big bang go live of the new platform.
The nature of the TARGET T2/T2S Consolidation Project, mainly related to the need for a Big Bang Approach, means that the migration preparation process for all participants becomes essential. If participants are not ready to migrate on the Go Live of the T2-T2S Consolidation Project, they may, among other consequences, be unable to pay or be paid in central bank money, be cut-off from access via an Ancillary System or need to access Payment Services through another counterparty (become an indirect member rather than a direct member). Even indirect participants will need to adjust IT applications to new SWIFT format, as required by their custodian or SWIFT gateway vendor.
TARGET stands for Trans-European Automated Real-time Gross Settlement Express Transfer and covers all dealing with central bank money for EUR. The TARGET platform allows financial institutions to settle in central bank money and the European Central Bank to conduct monetary policy and includes additional services
The aim of the T2/T2S Consolidation is to provide a more streamlined and technical updated solution across all services, which shall include shared functions to connect to all services, manage liquidity, maintain static data and provide shared admin services.
Challenges and Opportunities
New SWIFT messaging format and TARGET Gateway connection
All services will change to use the new ISO20022 standard message format, which is currently used in T2S. In addition, all ancillary systems connecting to the TARGET platform must go through the new ESMIG gateway, which will be the single access point to TARGET for all services. Connectivity test to TARGET will start in October 2020. Deadline for internal development and connectivity is 31st December 2020.
Migration to new static data model
The new TARGET platform has a central storage system for static data; Central Reference Data Management (CRDM) system. The CRDM system requires a full migration from all services. The account model changes from the consolidation as well as other static data changes will mean that the migration is not just a simple 1:1 movement of existing data. The setup will require adaption to the new concepts of the platform and must be re-defined. The final migration shall be completed over the same weekend for all participants. Hence, there will be 2-3 mandatory dress-rehearsals and the participants will be required to use a migration tool. Final deadline for migration readiness is 31st October 2021.
User Certification Testing
To allow participants to migrate to the new TARGET platform, they must pass mandatory TARGET User Certification tests covering all functions and services of the platform, consisting of 5 separate time boxed test phases with mandatory exit criteria. Final deadline for user test completion is 30st September 2021.
Central Liquidity Management
The Central Liquidity Management system for all TARGET services includes a bunch of new functionalities, which can automate and optimize liquidity management. This includes:
These functions can be leveraged through the CLM application or setup in CRDM.
The new Data Warehouse stores data from both the RTGS and T2S and will be accessible for TARGET participants. Users can query data through predefined reports with a data granularity as detailed as transaction/account/participant level. This will allow participants to use this data for internal analyses.
The shared reference data, connectivity, liquidity management, scheduler and billing for the TARGET services will make the use of further services much cheaper for participants. Furthermore, the LT Groups and ability to create user access groups can make the outsourcing of services possible to other participants or offering services on behalf of other financial institutions.