With the final three phases of TARGET2-Securities (T2S) set to roll out, Accenture and Clearstream wanted to get a sense of how banks are preparing for the new post-trade landscape in Europe. A survey of senior-level representatives from Europe-based banks of all sizes revealed the following five insights.
Ninety percent of survey respondents have a T2S readiness strategy in place. The other 10 percent of respondents did not identify specific risks during their impact assessments and believe their organizations are flexible enough to manage whatever comes their way.
Most banks are taking a “wait-and-see” approach, but some are using T2S as an opportunity to explore greater strategic change. More efficient liquidity management, collateral management, network operations and settlement are just a few of the key benefits they are hoping to achieve.
Sixty percent of survey respondents are adopting more than one access model for T2S. Banks are mixing access paths in many different ways, hedging their bets while they wait to see which access model emerges as the new industry standard.
There is a trend toward consolidating access to T2S markets. Despite the diversity of approaches so far, 40 percent of survey respondents indicated a preference for consolidating access to T2S through one or a few investor central securities depositories (CSDs).
Asset servicing is a key strategic consideration. The outsourcing of CSDs’ settlement platforms to T2S will result in the unbundling of settlement and asset servicing flows, making banks’ choice of asset servicing solution one of the most important decisions they will make.