Clearstream, BNP Paribas Securities Services, Intesa Sanpaolo and BBVA are developing an asset servicing model for a market environment with TARGET2-Securities (T2S). In this model, Clearstream will connect via its central securities depository to the T2S platform, hence attracting settlement flows, while the custodian bank partners will handle asset servicing at a domestic market level, bringing their local market expertise to the model. Target markets via these partners are Belgium, France and the Netherlands (with BNP Paribas Securities Services), Italy (with Intesa Sanpaolo) and Spain (with BBVA). Development work is in progress with the aim for T2S readiness once Clearstream has joined T2S in September 2016.
T2S is the future pan-European settlement platform that the European Central Bank plans to launch in June 2015. It is aimed at harmonising settlement flows in central bank money, however its impact goes beyond the settlement layer as T2S will effectively decouple settlement from asset servicing. Via the new partnership model, Clearstream will combine its own global settlement expertise with local market know-how. Thanks to Clearstream’s combination of an integrated international central securities depository (ICSD) and central securities depository (CSD) franchise, customers will be able to enjoy settlement in either commercial or central bank money on the T2S platform combined with asset servicing in a domestic market environment.
The market approach via local partners will increase the efficiency and smooth functioning of asset services in the future T2S environment. Customer benefits include improved notification timelines and corporate action deadlines, increased quality via services tailored to the local market and reduced operational risk by leveraging the local partner’s proximity to the market. Following the initial development of this model with the three founding partners, Citi and Erste Group Bank have also confirmed their collaboration with Clearstream to develop a T2S asset servicing model for Greece and Austria respectively. The model is open to further local bank partners.
Berthold Kracke, Head of Business Management and member of the Executive Board of Clearstream, commented: ‘TARGET2-Securities is a game-changer for the post-trade industry, far beyond settlement in central bank money that T2S targets. It is our role as market infrastructure to think through the impact of such developments and the advantages it can bring to our clients. We look forward to developing our T2S asset servicing model with our partners so that customers can enjoy the best of all worlds via Clearstream: T2S settlement in commercial and central bank money combined with excellent asset servicing via local service providers at best value for money.’
Alain Pochet, Head of Clearing and Custody at BNP Paribas Securities Services, commented: ‘The new model for T2S which we are developing with Clearstream will offer clients all the settlement benefits of the T2S platform, in addition to asset servicing, which goes beyond the scope of T2S, and will be supported through our strong local expertise in France, Belgium and the Netherlands. While bringing solid value to Clearstream and to its clients, this additional model enables us to continue developing our strong, long-standing relationship with Clearstream.’
Mario Domenico Recchia, Head of Local Custody, Global Banking and Transaction, Intesa Sanpaolo, commented: ‘T2S will change the game beyond expectations. We have been working with Clearstream for some time now to leverage our local expertise and scale to put in place tailored innovative solutions to ensure that their platforms will take full advantage of the simplification and efficiencies that T2S promises as far as Italian domestic securities are concerned. This is natural progression in the strong commitment we have to our key clients and this sector in general.’
Enrique Jiménez-Herrera, Head of Global Transaction Banking at BBVA, commented: ‘This innovative partnering concept announced today is key for taking advantage of T2S and complementing it with the best solution for asset servicing. The expertise of local agents is increasingly under demand, being the local touch that is a must-have for markets such as Spain. The focus on value added services such as corporate action and tax reclaim services will be the name of the game in the T2S environment. BBVA is well positioned to provide its bespoke solutions in the post T2S world. In a nutshell, Clearstream customers will have the advantages of being clients of an ICSD and CSD together with the excellent asset servicing provided by a local agent.’