Deutsche Bank: Optimising liquidity management in securities settlement

With the introduction of TARGET2-Securities (T2S), the settlement of securities in participating markets becomes real time and requires upfront funding in central bank money. Settlement Providers who act as T2S Payment Banks are required to anticipate their liquidity needs to facilitate the securities settlement process. This white paper explores four key aspects of the liquidity management process for investors and their service providers: liquidity challenges in T2S; liquidity bene ts of T2S architecture; additional liquidity solutions T2S might facilitate; and solutions beyond the scope of T2S that could nevertheless help to simplify and alleviate liquidity challenges for T2S participants.
The architecture of T2S helps in the process of liquidity optimisation in specific ways that the paper outlines. It also considers how reporting requirements relating to T2S can be accommodated and looks beyond the platform itself for additional techniques that custodians and other T2S service providers may be able to offer to mitigate broader liquidity constraints.
The full paper is available here.

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