Global Custodian Clearing and Settlement Issue 2018 | Page 29

[ M A R K E T
R E V I E W
|
T 2 S ]
T2S WAVES: A SUCESSFULL MIGRATION?
WAVE 1 9 WAVE 2 6 WAVE 3 5 WAVE 4 7 WAVE 5
06.22.2015 months 03.28.2016 months 09.12.2016 months 02.06.2017 months 09.18.2017
˜ ˜ BOGS ˜ ˜ Interbolsa
˜ ˜ Depozitarul ˜ ˜ NBB - SSS
Central
Romania
˜ ˜ Euroclear ESES
(BE, FR, NL)
˜ ˜ VP LUX
˜ ˜ VP SECURITIES
˜ ˜ Malta
stock
exhange
˜ ˜ Cleastream
Banking
Frankfurt
˜ ˜ Iberclear
˜ ˜ Baltic CSDs
˜ ˜ OeKB CSD
˜ ˜ CDCP
˜ ˜ KDD
˜ ˜ KELER
˜ ˜ SIX SIS Ltd
˜ ˜ LUX CSD
Monte Titoli
(Wave 1b
08.31.2015)
Euroclear
Finland*
*Euroclear Finland will not be able to migrate to T2S on the current date scheduled in September 2017 (alternative
migration schedules to be evaluated)
clients, our proposition is they are able
to plug our tri-party into their existing
trading account opened in one of our 27
local custodian branches across the globe,
leveraging when applicable T2S features.”
The aim will be to capitalise on en-
hanced buy-side demands for collateral
solutions, with the bank looking to use its
global and sub-custody network to enter
the tri-party market.
“We want to make available the tri-party
collateral management platform pools
of assets that were previously trapped
in local markets that were not eligible to
tri-party,” said Patrick Colle, CEO of BNP
Paribas Securities at a press briefing in
October 2017.
sub-custodian is getting in the tri-party
collateral management space.”
The introduction of the French bank to
the market will be a challenge to the sta-
tus quo that has existed for over a decade,
with the tri-party space being dominated
by BNY Mellon, Clearstream, Euroclear
and JP Morgan.
However, Grimonpont has welcomed
the prospect of new entrants as it could
not only encourage further tri-party
activity, but also enhance interoperability
arrangements between agent banks.
“I hope that new entrants in the market
will help to promote the use of triparty
in Europe, and in order for everyone to
benefit there will be a need to make sure
“We want to make available the tri-party collateral
management platform pools of assets that were previously
trapped in local markets that were not eligible to tri-party.”
PATRICK COLLE, CEO, BNP PARIBAS SECURITIES SERVICES
“Unlocking those local pools of collat-
eral is only possible if you are not only
a global custodian but also a multi-local
sub custodian. This is the first time a local
that the various pools of collateral can be
interoperated between the different pro-
viders, allowing users of one to allocate
to users of another provider. Hopefully
new entrants will help unlock some of
the assets that are currently not usable as
collateral in tri-party,” he adds.
Certainly, the need for high-grade
securities and collateral will be higher
than ever thanks to regulation. The onset
of the uncleared margin rules for OTC
derivatives, which has had massive impli-
cations on collateral and the processes by
which firms obtain it.
Both the buy- and the sell-side will look
to their collateral managers and tri-party
agents to provide efficiencies and the
capabilities to mobilise and allocate col-
lateral, being it in a T2S environment or
outside the Eurozone. Reducing settle-
ment instructions, promoting interoper-
ability and tri-party standardisation will
go a long way to solve collateral ineffi-
ciencies.
Furthermore, new initiatives being en-
acted by ICSDs and the ECB are encour-
aging as they will allow easier transfer of
collateral across markets. T2S has shown
how integrated sett lement and collateral
activities are, and as more collateral pools
continue to be unlocked by new struc-
tures and new entrants, we may even see
T2S volumes significantly increase.
Summer 2018
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