We see T2S in the context of a wider change process taking place in the financial industry. The migration waves are taking place against a rapidly changing regulatory backdrop that in Europe involves the implementation of new Basel III minimum ratios, EMIR mandatory clearing, and a tightening of rules under the aegis of AIFMD and UCITS V.
Within this context T2S is triggering change on two levels. Firstly there are mandatory changes – changes necessary to comply with new market practice and regulation. Alongside this there is the opportunity in particular for customers to reengineer and redefine their cash and securities networks to optimise their business in this new operating paradigm.
At Clearstream, we are dedicated to providing our customers with the widest choice possible as to how they implement their strategy for European market access in a post-T2S world. Clearstream is uniquely positioned to offer its customers access to T2S via either its ICSD, its T2S-in CSDs, or a combination of these access paths.
Our T2S offer is framed by the safety and regulatory compliance offered by the fact that we are primary market infrastructure providers. Our ICSD and our CSDs all have the status of Securities Settlement Systems (SSS), and as a group benefit from strong AA credit ratings.
Choose Clearstream’s ICSD access to reduce adaptation costs to a minimum
Our ICSD provides customers with a centralised access point to T2S and the global markets served by Clearstream, a total of 56 domestic markets along with the international market. This is offered by the ICSD in a manner that requires very limited adaptation on the part of the customer in comparison with their set-up today, and that is to be complemented by a best-in-class asset servicing, based on a partnership model with leading local agents.
The ICSD model in the T2S environment is to offer:
- Centralised access point to T2S and global markets (56 markets, the international market and 98 eligible currencies)
- Cash pooling for EUR and other currencies in Commercial Bank Money, along with Clearstream’s financing facilities
- Best in class asset servicing provided in partnership with leading local agents
- Leading triparty global collateral management and securities lending services
- Integrated funds processing services
Fully capitalise on the benefits of T2S by choosing Clearstream’s Investor CSD models
One of the key differentiators of our T2S offering is what we refer to as our Investor CSD model. This model leverages our CSD in Germany, the biggest participant in T2S, as a single gateway to European markets in the new T2S zone, and the CSD in Luxembourg, a joint venture with the Banque centrale du Luxembourg. Customers will also be able to take advantage of the ICSD network for settlement in markets outside of T2S.
This model provides never before available new opportunities for customers who want to fundamentally redefine their settlement infrastructure to take advantage of T2S, including:
- High quality, ICSD standard service levels
- Opportunities for cash and securities pooling throughout Europe and our ICSD network
- Cross-border mobilisation of collateral in real time
- Reduction of complexity and cost made possible via consolidation of network management, operational processes, and IT processes
- The full range of new T2S functionalities offered in each T2S-in market, including auto-collateralisation
- Settlement and Collateral Management Services in Central Bank Money
Seamlessly choose between Investor CSD and ICSD access per market, asset class or underlying customer
Our offer is extremely flexible and at Clearstream we pride ourselves on working with our customers to tailor solutions to their business needs. Customers can decide on their access via either the ICSD or the Investor CSD, as they see fit, defining access strategy per market, per asset class or per underlying customer.
There will be full interoperability between Clearstream’s CSDs and the ICSD. As a result, customers will be able to access all ICSD and CSD counterparties from both their ICSD and the CSD accounts. Customers will also benefit from one new modern standard connectivity interface, Xact, which will show all of their business across all Clearstream entities.
Customers can pool their assets at the Clearstream CSDs and benefit from ICSD services such as triparty collateral management. Thanks to the interoperability, customers will be able to seamlessly transfer collateral between T2S accounts at the CSD and ICSD accounts.
Clearstream will also make Eurobonds and investment funds available on T2S. This will enable customers to consolidate European domestic and international assets into a single pool of liquidity.