T2S High Level Proposals The view of a CSD

Transcription

1 T2S High Level Proposals The view of a CSD Paolo Carabelli Monte Titoli Spa June 25, 2007 Frankfurt, T2S Tri-Party Meeting

2 Background - Starting point Current Monte Titoli settlement system is: extremely efficient average settlement rate 99,74 cost-effective MT pricing used by the ECB as the benchmark for T2S pricing in the economic feasibility able to optimize at a significant level cash liquidity usage out of EUR 170 billion turnover, there are only EUR 8 billion cash movements on the NCB accounts, of which more than 50% coming from collateralization facilities On the other hand: Cross-border settlement activity hasn t fully developed yet Settlement is available only in EUR

3 Background Approach to T2S T2S could represent an important opportunity provided that it: Can help to increase the cross border activity with a more efficient process Takes into account the excellent performance of the current system Doesn t impact on the quality of the service we currently provide to our users T2S 67 proposals overall give a fair outline of the system Initial identification of what is fundamental and what require further work in particular: Areas that should require further analysis Elements that can introduce complexity Open issues

4 Key Features To minimize impacts and assure business continuity Accounts structure and possible holding segregation mode (1, 6, 9) Possibility to introduce additional deadlines for non-settlement business (25, 26) To guarantee indirect participants the same service they have now possibility to send matched instructions (30) To maintain high level of settlement efficiency Shaping and partial delivery (47) Advanced collateral functionality (41) Optimisation functionality (42) To allow CSDs to maintain full control of the settlement service and avoid demarcation dispute Exclusive maintenance of securities and participants static data (12, 13, 14, 15, 53)

5 Areas requiring further specification Service quality Level of performances T2S aims at reaching (Service Level Requirements) Management of custody activities More details regarding interaction between CSD and T2S for custody activities management (i.e. corporate actions) Type of connected entities Clear identification of eligible connected entities and their role (particularly trading platforms and CCPs) Interaction with non participating CSDs

6 Critical aspects Duplication of necessary data and processes to carry out the Validation process (27) Restriction of settlement service availability, specifically for free of payment operation (20) Length of the window for corporate action processing (Time Schedule) Clarification of matching binding since ECSDA standards don t exclude unilateral cancellation of matched trades (33) Introduction of common rules (38, 39, 40) for sequencing, prioritisation could cause loss of flexibility necessary to handle specific market requirements

7 Da definire Main open issues (1) ECSDA standards regarding matching to be completed since currently cover only OTC non CCP trades (33) Capability to cover the whole range of assets as required by principle 5 (e.g. non fungible securities) Clarification whether direct access is an option to be granted by CSDs or a right of the Participant (55) Better definition of data enrichment since lacking of it could make impracticable direct access (35) No clear indication regarding the criteria for maintenance and evolution of T2S in order to promptly meet new needs from the market Needs for CSDs to get information real time about participants activities, particularly for users directly connected (Interfaces)

8 Da definire Main open issues (2) Harmonization Usually takes time to reach an agreement Entails IT adaptation costs Requires changes to consolidated operational practice Impacts on all main processing Matching Settlement rules Timelines

9 Trademarks Borsa Italiana, MIB30, MIBTEL, Midex, Nuovo Mercato, NUMEX, NUMTEL, NUMTES, STAR, MIBSTAR, IDEM, MiniFIB, MCW Mercato dei Covered Warrant, EuroMOT, MTF, BIt Club, ITEX, Academy e Borsam@t are owned by Borsa Italiana S.p.A. Trademark BIt Systems is owned by BIt Systems S.p.A. Trademarks Cassa di Compensazione e Garanzia and CC&G are owned by Cassa di Compensazione e Garanzia S.p.A. Trademark Monte Titoli is owned by Monte Titoli S.p.A. Trademarks Piazza Affari Gestioni e Servizi and Palazzo Mezzanotte Congress and Training Centre are owned by Piazza Affari Gestioni e Servizi S.p.A. The above trademarks and all the other trademarks of Gruppo Borsa Italiana cannot be used without the previous written approval of the Company of Gruppo Borsa Italiana having the ownership of the same.